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COMMERCIAL RESEARCH

LOGISTICS PROPERTY MARKET H1 2017

2

Economic OverviewThailand is a newly industrialized

country (NLC). Its economy depends

substantially on exports, with accounting

for more than two-thirds of the country’s

total gross domestic product (GDP).

From the economic outlook report of

Bank of Thailand, the Thai exports and

imports are remaining stable over the

past five years, after major flooding in the

last quarter of 2011.

HIGHLIGHTS

FIGURE 1

Export – Import Volume Indices, Q1 2008 – Q2 2017

•The Thai exports and imports

remain stable.

• In the first half of 2017, the total

warehouse supply was 4,354,266

square metres.

• Theoveralloccupancyratestood

at 79.65% from last period.

• Theaveragerentsofwarehouse

market slightly decreased by

0.43% to 153.04 baht per square

metre per month.

FIGURE 2

Number of Containers Passing Through Laemchabang Port, H1 2014 – H1 2017

SOURCE : BANK OF THAILAND (BOT)

Global Finalcial Crisis

Major Flood

SOURCE : KNIGHT FRANK THAILAND RESEARCH

REMARK: TEU – TWENTY – FOOT EQUIVALENT UNIT CONTAINER

Inbound Outbound Growth

H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H12011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017

2,100,000TEU

1,800,000

1,500,000

1,200,000

900,000

600,000

300,000

0

6.54%

7.19%

6.19%

8.23% 7.54%

-3.77%-3.77% -4.16%-4.16%

1.44%1.44%

-1.67%-1.67%

2.54%2.54%

0.92%0.92%0.04%0.04%

In the first half of this year, the

number of containers that passed

through Laemchabang Port was

3,713,248 TEUs. This figure was the

highest on record since 2011. From

the statistics, we expect to see the

increasing of growth rate of the number

of containers that passed through

Laemchabang Port in the second half

of this year.

3

COMMERCIAL RESEARCHSECOND DRAFT LOGISTICS PROPERTY H1 2017

FIGURE 3

Number of Warehouse Supply, H1 2014 – H1 2017 (square metres)

SOURCE: KNIGHT FRANK THAILAND RESEARCH

FIGURE 4

Distribution of Warehouse Space by Province, as of H1 2017


500,000

400,000

600,000

300,000

200,000

100,000

-

500,000

400,000

600,000

300,000

200,000

100,000

-H

2 20

11H

1 20

12H

2 20

12

H1

2013

H2

2013

H1

2014

H2

2014

H1

2015

H2

2015

H1

2016

H2

2016

H1

2017

H2

2011

H1

2012

H2

2012

H1

2013

H2

2013

H1

2014

H2

2014

H1

2015

H2

2015

H1

2016

H2

2016

H1

2017

New Supply Existing Supply

Warehouse Market SupplyThe total warehouse supply was

at 4,354,266 square metres, which

increased from the last period by

62,362 square metres or just 1.45%.

In fact, 1,740,859 square metres has

been added to the market since 2014,

when the supply peaked with the

additional of three largest projects

in Samutprakarn and Khon Kaen.

Since then, warehouse supply has

slowed down as developers shift away

from speculative developments and

increasingly focus on catering to build

to suit solutions.

Most of warehouse space is located

in Samutprakarn province, with a total

area of 1,523,444.5 square metres or

34.99% of entire market. Samutprakarn

still remain the most popular locations

for logistic service providers because

this province is located not far from

Bangkok, the capital city of Thailand,

and the Suvarnabhumi Airport. While

about 21.99% of warehouse supply

are situated in Chonburi, along with

another 9.83% in Ayutthaya.

Future SupplyIn the second half of this year to next

year, we expected that approximately

200,000-250,000 square metres

of warehouse supply will enter to

the market. The future supply of

warehouse has increased, especially

in the areas that were affected by

the government’s Eastern Economic

Corridor policy (EEC) and a policy

called “Thailand 4.0”, such as Chonburi

and Chachoengsao provinces. These

policies will boost the investment and

economic development.

21.99%

34.99%

9.83%

9.26%

9.19%

4.85%

3.21%2.99%

2.25% 1.43%

Samutprakarn

Chonburi

Ayutthaya

Bangkok

Chachoengsao

Rayong

Khonkaen

Pathumthani

Lamphun

Others

FIGURE 5

Occupied Space and Occupancy Rate, H1 2014 – H1 2017


5,000,000

2,959,436

3,523,911

4,500,0004,000,0003,500,0003,000,0002,500,0002,000,0001,500,0001,000,000500,000

0

81.00%80.00%79.00%78.00%77.00%76.00%75.00%74.00%73.00%72.00%71.00%

H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017

3,736,111 3,829,1684,156,516 4,291,904 4,354,266

3,468,2763,421,7933,161,6222,851,5162,781,742

2,265,583 2,687,180

Supply Demand Occupancy Rate

79.65%79.73%76.06%74.47%74.46%76.26%76.55%

4

DemandThe total occupied space of warehouse

market this first half was 3,468,276

square metres, which increased by

46,482 square metres or just 1.36%

from the last period. The current

occupancy rate is remaining stable

at 79.65%. Since 2014, the gap of

occupancy level relatively stable

around 74.46% to 79.73% as supply

tends to be slow responding to the

slow increase in demand.

Suvarnabhumi-Bangpakong area

saw the highest occupancy rate of

warehouse at 86.57%, which increased

by 1.04% from previous period.

Meanwhile, we saw the highest jump of

8.51% at Eastern Seaboard zone since

2014.

In H1 2017, the net absorption was

86,737 square metres, lower than an

average around 47.8%. However, it

remained persistently positive for the

past three years.

Rental RateThe rental rate of warehouse market in

Thailand still remained sluggish over

the past three years. On average, the

rental rate slightly decreased by 0.43%

to 153.04 baht per square metre per

month. The latest data shows the

area that has the highest rental rate

was Suvarnabhumi and Bangpakong

at 157.3 baht per square metre per

month while the lowest rental rate was

Pathumthani and Ayutthaya at 144.5

baht per square metre per month.

The highest rental rates for warehouses were seen in Suvarnbhumi -Bangpakong area at 190 baht per square metre per month, followed by the utmost rent of 185 baht per square metre per month in Eastern Bangkok area.

Please note that the location of the warehouse is a major factor that

FIGURE 6

Occupancy Rate by Key Logistics Locations, H1 2014 – H1 2017

FIGURE 7

Net Change of Demand of Warehouse Space (Net Absorption), H1 2014 – H1 2017

FIGURE 8

Rental Rates by Key Logistics Locations, H1 2014 – H1 2017




SOURCE: KNIGHT FRANK THAILAND RESEARCHREMARK: NET ABSORPTION = A MEASUREMENT OF THE NET CHANGE OF THE DEMAND OF

WAREHOUSE SPACE OVER A SPECIFIC PERIOD OF TIME.

H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017

165.0

160.0

155.0

150.0

145.0

140.0

135.0

Eastern Seaboard Suvarnabhumi-Bangpakong Pathumthani-Ayutthaya Market

156.8 158.0 160.1 160.3 160.4158.6

157.3156.7

154.8

145.6 146.9 147.4 146.2146.2

143.9144.5

153.3151.5 151.9

152.1 153.4 152.7

154.4 154.9 154.9 154.9153.7

153.0

86,737142,302

329,192

111,669114,580

463,699

307,378

160,870

119,408

Average= 166,150.6

45,57462,940

49,458

500,000

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

-H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1

2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017

Eastern Seaboard Suvarnabhumi-Bangpakong Pathumthani-Ayutthaya Market

5

determines rental rate. However, other factors can also affect rental rates too such as design, warehouse conditions, economic conditions, specifications and building age.

OutlookFrom the economic outlook report of Bank of Thailand this year, the Thai economy continued to gain positive

FIGURE 9

Asking Rents by Key Logistics Locations, as of H1 2017

momentum from the government policy and business sentiment. Merchandise exports and tourism sectors expanded substantially, consistent with the continued improvement in external demand. We expect that this is a good sign of potential growth for the warehouse market.

However, the rental rate is forecasted to remain immovable due to the excess supply that added to the market since 2014.



Knight Frank Research, Reports are available at KnightFrank.co.th/Research

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For the latest news, views and analysison the world of prime property, visit

KnightFrankblog.com/global-briefing

GLOBAL BRIEFING

Thailand Contacts

Phanom KanjanathiemthaoManaging Director+66 (0)2643 8223 Ext [email protected]

Chaturawit WattanaprukExecutive Director+66 (0)2643 8223 Ext [email protected]

Surasak Limpa-ArayakulExecutive Director, Head of Valuation and Advisory+66 (0)2643 8223 Ext [email protected]

Roong SitthisankunchornExecutive Director, Head of Property Management+66 (0)2643 8223 Ext [email protected]

Marcus BurtenshawExecutive Director, Head of Commercial Agency+66 (0)2643 8223 Ext [email protected]

Frank KhanExecutive Director, Head of Residential +66 (0)2643 8223 Ext [email protected]

Risinee SarikaputraDirector, Research and Consultancy+66 (0)2643 8223 Ext [email protected] Phuket ContactNattha KahapanaExecutive Director, Knight Frank Phuket+66 (0)7631 8151 Ext [email protected]

Important Notice© Knight Frank LLP 2017 – This report ispublished for general information only andnot to be relied upon in any way. Althoughhigh standards have been used in the preparation of the information, analysis, viewsand projections presented in this report, noresponsibility or liability whatsoever can beaccepted by Knight Frank LLP for any loss ordamage resultant from any use of, reliance onor reference to the contents of this document.As a general report, this material does notnecessarily represent the view of Knight FrankLLP in relation to particular properties or projects. Reproduction of this report in wholeor in part is not allowed without prior writtenapproval of Knight Frank LLP to the form and content within which it appears. KnightFrank LLP is a limited liability partnership registered in England with registered numberOC305934. Our registered office is 55 BakerStreet, London, W1U 8AN, where you maylook at a list of members’ names.

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