FPIT adopting purple ocean strategy

FPIT adopting purple ocean strategy

Industrial property developer targets revenue growth of 10-15% per annum, writes Kanana Katharangsiporn

Sopon Racharaksa, CEO, Frasers Property Industrial (Thailand).
Sopon Racharaksa, CEO, Frasers Property Industrial (Thailand).

Industrial property developer Frasers Property Industrial (Thailand) or "FPIT" is adopting a purple ocean strategy to tap into both new and current markets with two key pillars: 'creating readiness' and 'differentiation', aiming for revenue growth of 10-15% per annum.

Chief executive Sopon Racharaksa said the industrial sector received minimal impact from the pandemic compared with other sectors, with a sharp rebound since the third quarter last year after a drop in April 2020, driven by eCommerce businesses.

"Covid-19 changed consumer behaviour to online purchases. It is likely a permanent change," he said. "Export turned around incredibly early this year as the economies of the US, China and Europe resumed very quickly."

This year, the number of new applications approved by the Board of Investment remained high but foreign investors were hesitant to enter the country. However, there was demand for short-term rents from existing businesses with a contract duration of 3-6 months.

Some demand was from manufacturers that were unable to export their items due to the container shortage and high transportation fees. They wanted a warehouse to store their products in while waiting for export orders to resume as usual, Mr Sopon said.

"Some of the short-term tenants are new customers. We will turn them into long-term ones," he said.

"For tenants such as eCommerce, which grow by 20-30% per year, it is not hard as their business is on the rise. But for manufacturers, it is challenging as they have hardly used outsourced warehouses."

He said industrial estate was so attractive that players in other sectors wanted to jump into it, for example, residential developers which faced a market slowdown over the past few years.

Sopon Racharaksa, CEO, Frasers Property Industrial (Thailand).

To be more competent in a highly competitive market, FPIT will create readiness by having access to high-value land bank in prime locations of its major shareholder – TCC Group, owned by the Sirivadhanabhakdi family.

"Land for industrial estate development is scarce and land prices are high due to the city plan's limitations. The group has plenty of land banks in various locations which have the potential to develop industrial property. Partnering with them will be an advantage."

Some of the large plots are in Eastern Economic Corridor locations with a combined area of 10,000 rai. In a big city like Bangkok, the group also has many properties which FPIT is exploring in terms of their potential to do in-property and in-city logistics.

"In inner city areas, we can turn car parking lots into last-mile deliveries or develop a vertical warehouse on the group's plots," he said. "We can partner with Frasers Property Home, one of our sister companies, to build a small-sized logistics centre near its housing projects."

FPIT also has a joint venture with specialist partner Mitsui Fudosan to develop a net leasable 150,000 square metre area for a smart industrial and logistics park on 200 rai in Bang Pakong district, Chachoengsao with an investment of 3.5 billion baht. Phase one will be completed in November 2021 following a delay last year due to the pandemic.

FPIT plans to develop an industrial township on a 4,700-rai plot on Bang Na-Trat Km 32 which it won in a bid for it in 2018.

It will also invest 2 billion baht to develop a new logistics park on an 80-rai plot in the Bang Phli area and another 2 billion baht to develop built-to-suit facilities with a total area of 130,000 sq m.

"In both the red and blue ocean, we need to be ready and different," he said. "It is a purple ocean strategy, a mix of highly competitive markets and new untouched markets."

He added that purple, which means an industrial zone in a city plan, will also be the company's new colour of identity from this month going forward.

FPIT was formerly TICON Industrial Connection Plc which Frasers Property Limited and TCC Group, acquired in 2017 before it merged with Golden Land Property Development Plc last year.

Currently, FPIT has industrial properties under management with a total area of 3 million sq m or 900 units in 15 provinces across Thailand. They comprise 1.2 million sq m of ready built factory and 1.8 million sq m of modern warehouse for e-commerce and logistics businesses. Moreover, FPIT expanded its investment in the industrial property business in Indonesia several years ago and recently in Vietnam in order to cater to all the demands of customers.

It aims for revenue growth of 10-15% per year, an occupancy rate of 85-90% and a new development of 150,000-200,000 sq m per annum with a yearly investment of 2.5-3.5 billion baht during 2021-2025.

"We are sailing to success and inspiring seamless business solution experiences to customers," Mr Sopon said.

Do you like the content of this article?

Sandbox death

A Swiss woman, 57, was found dead among rocks at a waterfall on Thursday afternoon. She was believed to be raped and murdered.


Hospital chief arrested over alleged commission fee

The director of state-run Bangkruai Hospital in Nonthaburi has been arrested for allegedly demanding a 35% commission fee from a contractor of a 280,000-baht computer system.


Boon in hot seat

Boon Vanasin, chairman of Thonburi Healthcare Group, is accused of spreading fake news and stock manipulation involving his talks about buying 20m doses of Pfizer-BioNTech vaccine.