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Thai industrial property to remain buoyant: Colliers

October 23rd, 2008 · No Comments


THAILAND’S industrial estate market remains upbeat thanks to government tax exemptions for developers, which will drive supply, demand and occupancy, in the face of the credit crunch, domestic politics and inflationary pressures, according to realtors Colliers International Thailand.

But local industry experts disputed the findings of its report, forecasting flat growth instead.

Incentives for developers, such as an eight-year corporate income tax holiday, plus import tax exemptions for machinery, and a 75 per cent cut in duty on essential raw materials will keep the market buoyant, last week’s report said.

‘The government has supported the industry by extending tax privileges to companies who set up factories here, from eight- to 13 years, to try to attract foreign investors,’ said Colliers International Thailand’s head of research, Risinee Sarikaputra.

While the biggest growth will be in smaller scale manufacturers, there is an expanding automotive industry on Thailand’s Eastern Seaboard, which has strong BOI investment zone privileges and good location, she said.

‘Right now, with the threat from increasing oil prices, more people are considering using an eco car. That’s why there are many manufacturing companies, such as Tata Group, coming to expand their factories in Thailand.’

‘There’s also an increased need for plants to convert sugar cane to ethanol (for alternative fuels), so even with the global slowdown industrial estates still have positive sights.’

The report says the industrial estate market’s supply, demand, price and occupancy rate will continue to rise, with the credit crunch being the biggest concern for investors.

Total supply for H108 was 69,635 rai (27,531 acres), with an additional 24,000 rai of industrial estate plots to come online by 2010 – mostly around the Eastern Seaboard and central zones.

An influx of smaller manufacturers renting SME factories, rather than buying industrial land plots to build their own plants, will see the segment’s capacity almost double from 114 factories with 216,000 sqm, to around 270 with 316,300 sq m by the end of 2009, it said.

However, Amata Corporation, Thailand’s largest industrial land developer, disputed the findings.

Last week, the firm slashed its 2008 sales forecast from 1,700 rai to 1,200 rai, with expected sales revenue cut from 5.5 billion baht (S$239 million) to 4.2 billion baht, because of the effect of the global financial crisis and domestic political turmoil.

‘With the current situation I don’t see how demand can increase,’ Amata’s COO Viboon Kromadit told The Business Times yesterday. ‘If we can keep demand at this year’s (revised down) level, it will be wonderful.’

‘The financial crisis and the political situation here are reducing demand. Investors are not stopping, but they are reviewing their plans, that is why I have reduced our sales targets,’ he said.

Local analysts also forecast flat growth for the industrial land market next year.

‘I’ve never seen it like this before,’ said an industrial property analyst at Phillip Securities (Thailand). ‘Last year we had political problems. This year it’s the economic slowdown. But this time the problems are more fundamental.’

Published October 23, 2008
© The Business Times

Tags: news · The Business Times (Singapore)

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