Thailand Financial News

The demand for industrial property grew significantly in 2005.  The total amount of industrial land sold in 2005 was 4,008 rai (1,603.2 acres), which is the highest record of industrial land sales since 1999.  Since no new supply was added to the market after the second quarter, the vacancy rate dropped to 15.6%, according to international property consultants CB Richard Ellis.

The total number of projects that have started operations from the Board of Investment (BOI) in 2005 was 359 projects, a 28% increase from the 281 projects the year before.  The total value of investment in these projects increased by 23% to 102 billion baht, compared to 83 billion baht in the same period last year. Mr. James Pitchon, executive director of CB Richard Ellis Thailand, reported that the industrial property market in 2005 continued to grow as a result of both international and national markets starting a new investment cycle, as shown by the Manufacturing Production Index (MPI) and Industrial Capacity Utilization (ICU), despite the generally slowing economic growth.  The majority of the foreign investment is still from Japanese companies. The MPI averaged 148.9 points in January to November 2005, which was 6% higher than the same period in 2004. The ICU rate averaged 70.8 points in the fourth quarter, 2.4 % higher than the rate registered for the same quarter in 2004. The highest growth for both MPI and ICU was for electronics & electronic products. “There has been no change in the asking price at most industrial estates and parks, quarter-on-quarter.  However, we expect Serviced Industrial Land Plot (SILP) prices to increase, because developers are purchasing additional land for future expansion at higher prices. Increasing construction costs will also act to drive prices higher.  Presently, some developers are trying to provide a discount against the market by maintaining their prices,“ added Mr. Pitchon. Many developers are developing more SILP and Ready-Built Factories (RBFs) in the market to maintain an inventory of land for new industrial estates and expansion. Demand for RBFs is growing, as foreign companies seek to relocate or set up new production facilities in Thailand. CB Richard Ellis expects that Thailand’s industrial property market will still have a strong growth rate in 2006. For further information: Mr. James Pitchon Executive Director 02 654 1111 Ms. Ngamjai Jearrajarat Corporate Communications Manager 02 654 1111 Ext. 522