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Thailand: Logistics properties uptick
The rapid growth of e-commerce together with the relocation of China-based manufacturing companies has significantly increased demand for modern logistics properties in Thailand.
The first quarter of 2019 saw a 16% year-on-year increase in net absorption of modern logistics properties. In fact, the first-quarter figure was more than half of total new absorption in 2018. This has driven the vacancy rate of modern logistics properties in Thailand to the lowest point since 2013.
Thailand Post, Kerry Express, DHL and SCG Express have been key players in the local logistics and delivery market for many years. They are now being challenged by contenders such as Best Express and Flash Express, both of which have strong backing from Alibaba, and Lalamove, which has partnered with Line since 2016. The expansion of existing companies and the emergence of new ones are good indicators of the future of both modern logistics properties and the retail market.
However, not all indicators are pointing up. The vacancy rate in ready-built factories is still high at 28%, while foreign direct investment in manufacturing in Thailand decreased by 26% compared with the previous year.
The strong baht has also been a complication. The currency has gained 12% against the yuan over the past 12 months and is also at a six-year high against the US dollar. This has made investing in Thailand more expensive and contributed to a decline in exports of goods and services.
“Chinese manufacturing companies have been investigating setting up manufacturing facilities outside of China to avoid [US] tariffs, and international companies that have plants in China are doing the same,” said Adam Bell, associate director of advisory and transaction services (industrial and logistics) at CBRE Thailand.
“We have seen an increase in inquiries, but many of them are closely assessing the US-China trade war situation before making a final decision.”
CBRE believes the overall outlook for industrial properties, including serviced industrial plots and ready-built factories in Thailand, should improve once progress on the Eastern Economic Corridor infrastructure development is more visible and the baht depreciates.
Rathawat Kuvijitrsuwan is an associate director with research and consulting, CBRE Thailand. He can be reached at [email protected]
Source: https://www.bangkokpost.com/business/1727271/logistics-properties-uptick