APPD Market Report Article

Thailand

May 26, 2024

Anawin Chiamprasert, Head of Research & Consultancy, Thailand

-1.4%

THB 159

Growth
Slowing

Demand keeps pace with the rapid market expansion

  • The demand for warehouse facilities continued to expand as Thailand’s economy showed positive signs of recovery. Tourist arrivals in 1Q24 have nearly doubled from the same period in 2023, driving domestic consumption, while export value has continued to expand for seven consecutive months (as of February 2024).
  • Thailand’s logistics market saw a healthy net absorption volume of 85,900 sqm in 1Q24, representing a 22.1% growth over 1Q23. A substantial part of this growth was derived from the take-up of new supply in the Eastern Vicinity and the Eastern Economic Corridor.

Vacancy rate sees marginal change despite a wave of new supply

  • In 1Q24, four projects were completed in Thailand, totalling 109,500 sqm. These projects were located in Samut Prakan, Chachoengsao and Chonburi. Notably, Alpha Industrial Solutions completed its first project in the EEC called Alpha Laem Chabang. Additionally, Prospect Development completed the refurbishment of its acquired warehouse, which has been established as Bangkok Free Trade Zone 7.
  • The vacancy rate saw a marginal change from the previous quarter. The vacancy rate stood at 11.5% in 1Q24, representing a 10-bps increase from 4Q23, as most of the new supply was speculatively built in newly-launched projects.

Stiff competition leads to stagnant rent dynamics

  • The average rent saw marginal growth of 0.79% q-o-q, reaching THB 159.3 per sqm, per month in 1Q24. Higher-than-average rates were recorded in certain areas, such as new assets on Bangna-Trat Road. However, minimal movement of rents was observed as a result of stiff competition and a strong supply pipeline.
  • The Prime Grade warehouse market yield remained flat at 6.1% in 4Q23, with no significant change in market trends. With the maturity of the market, developers shifted more focus to securing built-to-suit deals rather than speculative ones.

Outlook: Market to keep its upward trajectory

  • Strong supply growth is expected to continue in 2024, with roughly 485,000 sqm of new supply from 12 projects expected to be completed. This will add up to a total of 5,779,000 sqm. Most of the new supply will be located in the Eastern Vicinity and the Eastern Economic Corridor submarkets, with two completions in the Northern Vicinity submarket.
  • A marginal increase in market average rent is expected in 2024, as the new supply is located in high-demand areas. However, average rents will face pressure from strong competition among both existing and new players.

Note: Thailand Logistics & Industrial refers to the Greater Bangkok prime logistics market.

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