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Demand in the industrial property market still weak

By on Dec 28, 2009 in Industrial, Research

Thailand Industrial MarketView Q3 09

Overall demand in the industrial property market remained weak, only 236 rai were sold, down 7.5% Q-o-Q and 82.2% Y-o-Y. A Chinese agricultural company bought 100 rai in Rojana Industrial Park, Ayutthaya.

Automotive production has improved in Q3 2009 with manufacturing firms increasing production and recruiting new staff in August 2009. Vehicle production capacity utilization increased 27.5% Q-o-Q from 45.9 to 58.5. The recovery will increase the demand for industrial land.

The Administrative Court suspended construction permits for 76 projects worth 400 billion baht in Map Ta Phut Industrial Estate in Rayong, where health and pollution concerns have been raised. The (temporary) suspension of these projects will affect the sentiment of investors. Mr. Korn Chatikavanij, Finance Minister, said that it could slow the economy (GDP) by 0.4%.

B.O.I. project approvals are still low. The total value of BOI-approved projects decreased by 34.5% Y-o-Y, compared the first nine months of 2009. The total value of BOI-approved projects was THB 176 billion in 9M 2009.

687 projects have been approved by BOI since the beginning of this year, down 14% Y-o-Y. 63% of the total investment value was located in BOI Zone 2. The largest contributions came from the service and infrastructure sector (THB 66.8 billion), followed by the agriculture product (THB 28.4 billion).

Outlook

The industrial sector is feeling the full force of the global economic down turn as can be seen from the poor SILP sales and B.O.I approvals. This has been further damaged by the suspension of 76 projects worth 400 billion Baht in Map Ta Phut Industrial Estate. These projects are currently under review and a decision will be make on these soon.

On a more positive note automotive production has improved in Q3 with manufacturing firms increasing production and recruiting new staff in August 2009. Vehicle capacity utilization increased 27.5% Q-o-Q from 45.9 to 58.5. The recovery will increase the demand for industrial land.

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