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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
SOURCE : KNIGHT FRANK THAILAND RESEARCH
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
SOURCE : KNIGHT FRANK THAILAND RESEARCH
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 RESEARCH
SOURCE: KNIGHT FRANK THAILAND RESEARCH
SOURCE: KNIGHT FRANK THAILAND RESEARCH
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.
SOURCE: KNIGHT FRANK THAILAND RESEARCH
SOURCE: KNIGHT FRANK THAILAND RESEARCH
Knight Frank Research, Reports are available at KnightFrank.co.th/Research
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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]
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