Industrial estates recover from floods

Real Estate October 08, 2012 00:00

By The Nation

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Industrial estates are recovering from last year's record floods, with both demand for and supply of industrial space, occupancy rates and prices up in the first half of this year from the last half of last year, according to Collier International Thailan

The firm’s research showed that the floods last year were the latest in a series of crises to crush the industry. Foreign investment was badly hit by the 2008 global financial downturn and was not helped by political upheaval including the airport blockade in 2008 and political protests in 2010.

By the end of the first half of this year, about 60 per cent of factories affected by the 2011 floods had resumed operation, and the take-up of industrial estates in every zone has increased compared to the last six months of 2011.

The Eastern Seaboard, which was relatively unaffected by flooding, has seen the greatest take-up this year and is the dominant area for Thailand’s industrial estate activity, both for new investors and for those looking to move operations away from central areas, which were the worst affected by the floods.

Japan remains by far the largest foreign investor in Thailand, with Japanese investment during the first half of 2012 more than equalling the investment of all other countries during 2008-10.

The Industrial Estate Authority of Thailand (IEAT) is focusing more on Thailand’s border provinces, such as Kanchanaburi and Chiang Rai, which stand to benefit both from increasing trade with Myanmar and from the Asean Economic Community planned for 2015.

About 2,590 rai of industrial estates were added in the first half of 2012 with the total supply nearly128,450 rai. All industrial estates in the flood area postponed their expansion plans and are waiting for their barriers to be completed, so new supply in the first half of 2012 was in the East only.

The Eastern Seaboard and Central region account for more than 95 per cent of the total supply. More than 82,000 rai or 64 per cent were in the Eastern Seaboard and this continues to increase, especially after the floods in the Central region in the fourth quarter of 2011. Some industrial estates are also planned for development in the Southern Seaboard.

Many industrial estate opera

tors were planning to launch many industrial estates and expand their current properties, especially in non-flood areas, such as Chon Buri, Rayong, Prachin Buri and some neighbouring provinces.

About 59,300 rai have received approval from the IEAT and/or Board of Investment to be developed as industrial estates. This land will be developed gradually in phases but it is not known when it will be available for sale or rent. The Eastern Seaboard shows the largest expected increase with more than 24,200 rai followed by the Southern Seaboard with 21,300 rai.

The price of land for sale in industrial estates or industrial parks is based on factors such as location, proximity to transport facilities, infrastructure and a supplier base. Bangkok commands the highest land prices as it is a centre of transport, which includes sea ports and international airports.

Second and third are Chon Buri and Chachoengsao. The wide variation of prices in the two provinces is due to a number of industrial estates being located close to Bangkok while others, mostly pulp and paper manufacturers, are located further away from the capital.

Provinces such as Prachin Buri and Saraburi have much cheaper land prices due to their locations far from Bangkok or port facilities. However, after the floods in the North Central region, land prices rose in the eastern industrial estates by about Bt500,000 per rai.