Thailand Industrial Estate Market Q4-2008

Market Research T H A I L A N D I N D U S T R I A L E S TAT E M A R K E T THAILAND INDUSTRIAL ESTATE MARKET HIGHLIGHTS | 4 th q uarter | 2 0 0 8

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The Knowledge Report T hailand industrial estate M A R K E T |

4 th Q uarter

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2008

INDUSTRIAL ESTATE MARKET OVERVIEW Total Current Supply The supply of serviced industrial land plots has increased every year. A high increase of 10.4% was seen in 2007. In 2008, the total supply at the end of Q4 was 104,279 rai, an increase from 2007 of 6,569 rai or 6.7%.

The Eastern Seaboard area accounts for 69,635 rai of the total supply, the highest of the five regions; the lowest supply is in the Northeastern area accounting for 4.03 rai only.

Figure 1 : Supply of industrial land plots by location, Q4 2008

Source : Industrial Estate Authority of Thailand, Board of Investment (BOI) and Colliers International Thailand Research

New supply added in 2008 was approximately 6,569 rai, of which some 91.5% was in the Eastern Seaboard area (6,012 rai), of which 3,385 rai was in estates owned by Hemaraj Land

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and Development and another 1,693 rai by Amata Corporation PCL. The only other area that added new supply in the year was the Central area with approximately 557 rai .

The Knowledge Report | 4th Quarter | 2008 | Thailand Industrial Estate Market

Demand Trends The cumulative take up of industrial land plots as at the end of 2008 was 80,800 rai. The highest cumulative take up in terms of

area (rai) was in the Eastern Seaboard area, with approximately 50,213 rai, followed by the Central area, with 28,666 rai.

Figure 2 : Supply and demand of industrial land plots, Q4 2008

Source : Industrial Estate Authority of Thailand, Board of Investment (BOI) and Colliers International Thailand Research

Occupancy Rates and Prices In 2008, the highest occupancy rate was in the Central area, followed by the Northeastern area, although based on very low supply base. The Eastern Seaboard area, which accounts for the largest share of supply ranked third, with an average of 72.11%. Within the Central area, Bangkok and Samut Prakarn have the highest occupancy rate, at 98% and 99%, respectively.

Our study has shown that within the Eastern Seaboard, Rayong commanded the lowest occupancy rate, with an average of 68%, while Chonburi commanded the highest occupancy rate of 80%.

The median price for industrial land plots in industrial estates tends to fall in a range between THB 3 million and THB 4 million. The highest price per rai is THB 7.5 million in the Eastern Seaboard area at Wellgrow Industrial Estate, which has

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an occupancy rate of 94% due to its convenient location and excellent facilities, while the highest price in the Northeastern area is only THB 1.7 million, the lowest of the five regions. The Eastern Seaboard and Central areas have a wide range of prices, from THB 600,000 to THB 7.5 million per rai due to the large number of suppliers.

The price of SILPs at Hemaraj Industrial Estate increased by 5%, from THB 2 million per rai to THB 2.1 million per rai at the beginning of July 2008. The average price at Amata City Rayong stands at THB 2.3 million per rai, while prices at Amata Nakorn increased to THB 4.5 million per rai from just THB 3.5 million per rai.

The Knowledge Report | 4th Quarter | 2008 | Thailand Industrial Estate Market

Outlook: Industrial-estate developers have scaled down their land-sales targets for 2009 since many potential clients are postponing investment decisions. The US financial crisis has already become global, and Thailand’s political uncertainty continues. Both have worsened the climate and prospects for foreign direct investment. Electronics, automobiles and parts, and ceramics are likely to be particularly adversely affected, while increased unemployment rates will result as projects are scrapped. However, the situation may be better than projected if the Government successfully implements an effective assistance programme soon and business operators can adapt to the slowdown.

As exports decline, Government efforts are being geared to some extent to increasing domestic consumption and could throw a lifeline to Thailand’s crucial automotive industry, which has responded to the global downturn with production cuts that could cause massive layoffs. Confidence is very important to attract foreign investment. It will take time to win back foreign investors’ confidence and to encourage potential investors to consider Thailand as an attractive investment destination, especially in relation to rival countries such as Vietnam or even Malaysia.

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Colliers International 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

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This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.