Foreigners Savouring Investment Potential

February 4, 2022

A birds-eye view of the world-class logistics campus dedicated to Central Retail Corporation, which covers 75,000 square metres and is strategically located in Frasers Property Logistics Center (Bangplee) in Samut Prakan.

Despite inbound travel difficulty, foreign investors are still looking to acquire warehouse facilities and manufacturing property as an investment, according to property consultant CBRE Thailand.

Adam Bell, head of industrial and logistics, said there were a number of foreign investors looking to acquire warehouse facilities in Thailand, but there are limited quality investment properties for sale.

"The majority of quality warehouses are constructed by developers who tend not to dispose of income-producing assets. If they do, they would sell them into the real estate investment trust that they manage," he said.

Demand from foreign investors was not restricted to warehouses. Many of them were also willing to look at acquiring manufacturing property as an investment.

Some eyed properties for sale and would offer leaseback transactions to help secure occupiers financially.

According to CBRE, a recovery of foreign direct investment (FDI) into the manufacturing sector last year will boost demand for ready-built factories.

In the third quarter of 2021, FDI in the manufacturing sector totalled US$1.57 billion, the largest amount since the first quarter of 2019 at $1.85 billion, before dropping to $1.14 billion in the second quarter of 2019.

He said many investors in logistics were interested in the Bang Na-Trat area, followed by provinces around Bangkok and areas included within the Eastern Economic Corridor (EEC).

"It is not simple for foreign investors to acquire investment property without a Thai partner and there is also much demand for logistic investment property from Thai investors, as a result, it is very competitive at the moment," he said.

Mr Bell said a shift in supply chain would continue in 2022 as manufacturers continued to build resilience into their network to protect businesses against future disruptions.

Nearshoring of supplier bases could promote growth in both industrial and logistics spaces in the country.

Frequency and complexity of the shift in travel restrictions in Thailand and other countries will have an adverse effect on site inspections, contract signings and delay decision-making for new site acquisitions and leasing activities relating to inbound investment.

Mr Bell said large e-commerce companies would assess demand within certain areas before developing a distribution point in that area.

He said a number of the leading e-commerce players are also seeing growing potential areas for warehouses in the north and the south of Bangkok.

Due to the growth of e-commerce and online platforms, data centre was an emerging market in Thailand.

Landlords should study their requirements to prepare for the opportunities that could arise.

"Occupiers should also engage landlords in advance to secure built-to-suit facilities to meet the specific business needs," he suggested.

Source: Bangkok Post