APPD Market Report Article

Thailand

August 26, 2022

Jeremy O'Sullivan, Head of Research, Thailand

0.0%

THB 153

Rents
Falling

Demand continues to be driven by e-commerce

  • Demand in the Thailand market has continued to be driven by the e-commerce sector and other subsectors that have catered to the e-commerce market, such as 3PL players.
  • Maturing markets for main demand drivers, such as e-commerce and 3PL, may result in a slowdown in demand over the coming years.

Rents rebound in the market due to shortage of supply

  • Supply has been focused in two main locations, Samut Prakan and Wang Noi.
  • Furthermore, new supply is expected, in the form of new players such as the Bangkok Free Trade Zone and Alpha Industrial Solutions.

Maturing market leads to lower yields

  • Increasing construction costs has led to lower yields, amid the maturing market.
  • Higher rents in the previous half of the year have stemmed from the limited supply in logistics hotspots, with the remaining supply commanding a premium in comparison to other locations.

Outlook: Mature developers adopt a build-to-suit approach

  • Several mature developers have adopted a build-to-suit approach, launching only a small portion of ready-built warehouse space and reserving a portion of the projects for built-to-suit purposes. Future supply is expected to be predominantly build-to-suit.
  • The maturation of the market will likely give rise to lower rents, with older assets competing with the new premium-grade supply.

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

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