FDI drives demand for industrial land
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Foreign direct investment (FDI) is likely to continue to drive the demand for industrial estates this year, according to research by Knight Frank Thailand.
The real-estate consultancy’s executive director Marcus Burtenshaw said the research showed that foreign investors continued to seek good logistics infrastructure, especially in areas not susceptible to flooding. This will drive the demand for the land to develop factories, especially in industrial estates.
According to the research, the total supply of serviced industrial-land parcels (SILPs) in estates, zones and parks in the final quarter of 2012 reached 125,325 rai (20,052 hectares), representing an increase of 2.07 per cent from 2011.
A total of 5,288 rai of industrial land was sold over the course of 2012, an increase of 1,104 rai from 2011, or 26 per cent.
However, positive absorption has been seen in the market for eight consecutive quarters, reflecting strong demand derived from record FDI inflows, especially from Japan.
Some of this can be attributed to flood recovery and relocation, but new Japanese investors have also shifted their attention to Thailand in the wake of rising labour costs at home and continued political tensions with China.
Industrial-land prices throughout Thailand range from Bt1 million to more than Bt16 million per rai (Bt625-Bt10,000 per square metre). During 2012, prices across the country increased by about 5 per cent on average; however, serviced industrial land in the provinces that did not flood in late 2011 experienced the greatest growth.
Prices on the Eastern Seaboard increased by 6.34 per cent and the area described as the Central Eastern Zone, which incorporates Prachin Buri province and some of Chachoengsao, by 6.43 per cent. Some major developers on the Eastern Seaboard were even able to increase prices by 15-20 per cent in response to increased demand.
The total supply of ready-built factories increased by 17.82 per cent last year to 2,654,537 square metres, increasing by 3.72 per cent in the final quarter as developers responded to high demand.
The factory rental market’s occupancy rate stood at 89.76 per cent in the final quarter of 2012, up from 88.99 per cent in the previous quarter.
