MODERN LOGISTICS PROPERTIES TO TAKE OFF IN 2019

Real Estate Press Releases Tuesday April 2, 2019 13:22
Bangkok--2 Apr--CBRE Thailand

Globally, Modern Logistics Properties have become one of the most sought-after asset classes for property investors, according to CBRE, a leading international property consultant. This is because of the huge increase in demand driven by the growth of e-commerce. E-commerce retailers need very high specification warehouses to use as fulfilment centres and, around the world, developers have struggled to keep up with demand because e-commerce has grown so quickly.

"Sheds are now sexy," said James Pitchon, Executive Director at CBRE Thailand. "Warehouses or modern logistics buildings, as we now call them, have become a sought-after asset class, more popular in some countries than both offices and shopping centres. Rising demand and, in many cases, rising rents have been a key draw for this type of asset."

E-commerce is just taking off in Thailand, currently accounting for only a small percentage of retail sales, but Thai e-commerce is expected to rise rapidly and should reach the levels of more advanced markets where it accounts for 15-18% of total retail sales.

The growth in e-commerce has led to an increased need for improved efficiency in the delivery system, inventory management, and transportation model. Based on research by David Egan, Global Head of Industrial and Logistics Research at CBRE, on the relationship between online sales and demand for modern logistics property in the USA, CBRE estimate that, using a similar ratio to the US market, every THB 1 billion of online sales in Thailand will generate 4,000 square metres of demand for e-commerce logistics space.

Adam Bell, Head of the Industrial and Logistics team at CBRE Thailand, believes that 2019 will be the year that demand for modern logistics space in Thailand, especially Bangkok, really takes off.

According to former Minister of Industry, Uttama Savanayana, Chinese e-commerce giant Alibaba Group and SET-listed WHA Corporation expects to announce a joint investment plan sometime this year, WHA will be granted 232 rai (91.7 acres) in Chachoengsao's Bang Pakong district for an e-commerce special economic zone, with an investment of THB 1.3 billion in robotics, automation, logistics, and a digital centre.

WHA also informed the Stock Exchange of Thailand that the company has set up a joint venture company with JD Future Explore I Limited to construct, manage, and operate logistics facilities projects.

These two big e-commerce players will not only be occupiers but joint venture partners in these new developments which is slightly different to many parts of the world where e-commerce companies have been tenants rather than development partners.

CBRE predict that demand for modern logistics space will grow rapidly in-line with the growth of e-commerce businesses in Thailand, and that logistics properties will become one of the fastest-growing sectors in the Thai property market.

One of the challenges will be finding sites at the right price in the most sought-after locations. To date, the hot spot has been along the Bangna-Trad Highway between Km. 18-24, especially in the areas zoned for industrial development. Site acquisition in this location has become harder because of the shortage of suitable large sites and the rising expectations of achievable sale prices by land owners.

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE established an office in Bangkok in 1988, followed by its Phuket office in 2004. CBRE Thailand has grown to be the leading real estate services provider, offering a broad range of integrated services, including property sale and leasing, facilities, transaction, and project management; property management; investment management; appraisal and valuation; and strategic research and consulting. Please visit our website at www.cbre.co.th


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