Bangkok--Aug 23--CB Richard Ellis
Demand for ready-built factories for rent is growing. The total
number of leased factories from the seven main suppliers has increased by
almost 10% in the first half of 2005 from 254 to 276 in the second quarter,
totalling 497,000 square metres, with occupancy rates ranging between 70%-80%.
CB Richard Ellis expects demand to grow and that the major industrial
developers will expand their range of products to include distribution centres
as well as factories.
Historically manufacturers have had to buy land and build their
own factories. However, three pioneering developers, Thai Factory Development
(TFD), Thai Industrial Connection (TICON) and the industrial estate developer,
Hemaraj, began to build standard factories for rent known as “Ready-built
Factories” (RBFs).
To date, the developers have concentrated on building factories of
between 1,000-3,000 square metres on industrial estates and parks. The estates
where RBFs are currently the most popular are at Bangpa-In, Hi-Tech and Rojana
in Ayudhaya, Amata Nakorn in Chonburi, and Amata City and the Eastern Seaboard
Industrial Estate in Rayong. The average factory rentals range from 150-220
baht per square metre per month.
This business has now grown and there are now five major players and
two property funds. TICON is the largest player and they now have 126 leased
factories with a total area of approximately 281,000 square metres. In addition,
TICON have established the TICON property fund which owns 39 factories with
a total of 89,900 square metres. In addition to TICON, the other significant
developers are TFD, Amata, Hemaraj and Pinthong.
As of the second quarter of 2005, TFD has leased 29 factories with
a total space of approximately 37,000 square metres. The company aims to add
20 factories with approximately 26,010 square metres to its portfolio in 2005.
Hemaraj has leased 35 factories out its total of 78 factories, while Pinthong
has 32 factories leased.
At the end of 2004, Amata Corporation Plc set up a new joint venture
company with Summit Auto Industries Group, namely Amata-Summit Ready Built
Co. Ltd., aimed at diversifying its business into ready-built factory and
logistics fields. The company offers modern ready-built factories under the
slogan “Plug and Go” to facilitate SMEs to start operations quickly. They
completed 8 RBFs in both the Free Zone and the General Processing Zone at the
Amata Nakorn Industrial Estate in the second quarter of 2005. To date, the
company has leased 4 factories, and is now expanding in a second phase which
comprises 7 RBFs scheduled to complete in early 2006. In Phase 1, the factories
ranged from 850-1,200 square metres while in Phase 2, the size will range from
1,300- 2,500 square metres.
RBFs of Major Developers
Developer Description 2004 Q2, 2005
TICON Total no. of factories 168 158
No. of leased factories 140 126
Leased space (sq.m.) 304,388 281,395
Factories under construction 64 64
TFD Total no. of factories n.a. 40
No. of leased factories 36 29
Leased space (sq.m.) 40,003 37,700*
Factories under construction n.a. n.a.
Amata Total no. of factories - 8
No. of leased factories - 4
Leased space (sq.m.) - 7,600
Factories under construction - 7
RBFs of Major Developers
Developer Description 2004 Q2, 2005
Hemaraj Total no. of factories 72 78
No. of leased factories 49 35
Leased space (sq.m.) 86,500 65,000
Factories under construction 6 0
Pinthong Total no. of factories 33 35
No. of leased factories 29 32
Leased space (sq.m.) n.a. n.a.
Factories under construction 4 8
TFUND Total no. of factories n.a. 39
No. of leased factories n.a. 39
Leased space (sq.m.) n.a. 89,900
Factories under construction n.a. 0
TIF1 Total no. of factories n.a. 12
No. of leased factories n.a. 11
Leased space (sq.m.) n.a. 16,077
Factories under construction n.a. 0
* Estimated from an average unit size
Source: RBFs Developers and CBRE Research & Consulting Services
In the second quarter of 2005, two new Type 1 industrial property
funds were listed. TICON has established the TICON Property Fund managed by
ING Funds (Thailand) Co. Ltd. This fund has invested in 39 factories located
in 5 industrial estates and parks, including the Amata City and Amata Nakorn
Industrial Estates, Hi-Tech Industrial Estate, Bangpa-In Industrial Estate and
Rojana Industrial Park. Another property fund which is also managed by ING
Funds (Thailand) Co. Ltd. is the Thai Industrial Fund 1. This fund has invested
in 12 land plots and factories located in 5 industrial estates and parks,
including the Hi-Tech Industrial Estate, Bangpa-In Industrial Estate, Bangkadi
Industrial Park, Navanakorn Industrial Promotion Area and Latkrabang Industrial
Estate sold by TFD.
The property fund structure provides liquidity for developers and
access to income producing property for equity investors.
Demand for RBFs is mainly coming from international companies. These
companies do not want to tie up capital in property assets and prefer to rent,
rather than buy land and build their own property. Many of these companies are
second or third-tier suppliers in the automotive or electronics industries.
They need fast start-up times and are therefore attracted to buildings which are
ready for occupation.
The normal lease structure for RBFs is three years, providing companies
with the flexibility to easily expand, without the burden of disposing of an
existing facility and the acquisition of a new property.
CB Richard Ellis believes that the RBF business will grow and that
developers will diversify into other areas of the industrial and logistics
property market. For example, recently TICON bought a 388-rai land plot
(155.2 acres) on Bangna Trad km 39 to develop a logistics park.
Ms. Yossavadee Wassarakit, the Head of Industrial Services at CB
Richard Ellis, sees a growing demand for rental factories particularly from
Japanese companies. She also believes that we will see developers building
more properties and focusing on logistics and distribution centres.
About CB Richard Ellis
Headquartered in Los Angeles, CB Richard Ellis is a leading global
real estate services firm. With more than 17,000* employees, the company serves
real estate owners, investors and occupiers through 300 principal offices
worldwide. The company’s core services include property sales, leasing and
management; corporate services; facilities and project management; mortgage
banking; investment management; capital markets; appraisal and valuation;
research and consulting. CB Richard Ellis is a public company, listed on the
New York Stock Exchange under the symbol CBG.
CB Richard Ellis established an office in Bangkok in 1988 and in
Phuket in 2004. CB Richard Ellis (Thailand) Co., Ltd. has grown to be a leading
real estate services provider, offering a full range of services including sales
and leasing for all types of property, property and facilities management,
valuation and advisory, and research and consulting. For more information,
visit the company's website at www.cbre.co.th.
* Includes partner offices
FOR IMMEDIATE RELEASE
For further information
Mr. James Pitchon
Executive Director
02 654 1111
Ms. Yossavadee Wassarakit
Manager — Industrial Services
02 654 1111 ext.309
Ms. Ngamjai Jearrajarat Corporate Communications Manager
02 654 1111 Ext. 522 End.