Land transactions in industrial estates during the first half of 2024 exceeded the annual target set by the Industrial Estate Authority of Thailand (IEAT), driven by strong demand in the automotive sector, particularly from Chinese investors.
Phattarachai Taweewong, director of the research department at property consultant Colliers Thailand, said the most active investors in the automotive industry were locals and Chinese.
"The investors are mainly auto parts manufacturers for electric vehicles [EVs]," he said. "The largest land purchaser is a new EV brand from China."
According to Colliers' market research, land transactions in industrial estates in the first half totalled 4,020 rai, surpassing the IEAT's annual target of 4,000 rai.
Of this total, 2,295 rai were purchased in the first quarter, marking the highest figure on record, while 1,725 rai were sold or leased via 68 transactions in the second quarter.
More than 80% of the land transactions in the second quarter were attributed to the smart automotive industry, predominantly from China, with the majority of the remainder coming from the machinery and electronic sectors.
The take-up rate registered 84%, the highest in three years, reflecting a 1.3% quarter-on-quarter increase and a 4.8% year-on-year rise.
"We anticipate demand by year-end will rise to 7,000 rai, reflecting consistent interest and investment in the market," said Mr Phattarachai.
In the second quarter, more than 85% of the land transactions occurred in the Eastern Economic Corridor (EEC) provinces. Investors preferred Rayong and Chon Buri over Chachoengsao.
"In Rayong, land sales significantly outpaced those in Chon Buri because investors needed large parcels of 1,000-2,000 rai in one piece, which are very rare in Chon Buri," he said. "Land prices in Rayong are also 30% lower than Chon Buri."
Mr Phattarachai said the prices of existing plots in industrial estates rose slightly each year post-pandemic as the industrial sector recovered. However, raw land adjacent to industrial estates where developers wanted to expand saw prices triple compared with pre-pandemic levels, according to Colliers.
For instance, land near WHA is now offered at 1 million baht per rai, compared with 200,000-300,000 baht per rai before 2019.
"Acquiring large land parcels of more than 1,000-2,000 rai, particularly in the EEC area, remains a significant challenge because of limited availability and rising land prices," he said. "The scarcity has been exacerbated by high demand and competitive bidding."
However, more than 10,000 rai of new industrial land is anticipated to be launched over the next three years, which should help alleviate constraints to a certain extent and provide new opportunities for development, said Mr Phattarachai. This influx is expected to support the growing industrial sector and meet increasing demand for large-scale industrial facilities.
As of the second quarter of 2024, the total industrial estate land stock remained unchanged at 190,212 rai, with a net leasable and saleable area of 127,773 rai, showing no change in capacity.
Operators are focusing on developing eco-industrial towns and smart industrial systems to enhance the standards of existing industrial parks, with plans to extend these improvements to additional parks in the future.
"Demand from China for industrial opportunities in Thailand is rising, primarily based on the relocation of Chinese factories resulting from the trade war with the US," he said.
This shift highlights Southeast Asia, with Thailand standing out for its supportive investment measures and favourable policies, said Mr Phattarachai.
The government's focus on new investments in targeted industries reinforces Thailand's readiness to accommodate this influx.
"To capitalise on this growing demand, developers should enhance their industrial parks by incorporating innovative technologies and sustainable practices, such as ecosystems and zero-carbon policies," he said.