During the first half of 2024, the logistics property market in Thailand has seen outstanding growth, driven by increasing demand from key sectors such as e-commerce, automotive, and electronics. Supply is expanding steadily, and the market has shown resilience and adaptability, reinforcing Thailand’s position as a regional logistics powerhouse.

Economic recovery played a very huge role in this growth. Compared to the same period in 2023, Thailand’s GDP expanded by 2.3% Y-o-Y in Q2 2024, rebounding from a 1.6% contraction in Q1 2024. Overall, GDP growth of 1.9% Y-o-Y largely relied on robust performances in the industrial and service sectors.

In return, the logistics property market reflected the economic momentum as ready-built warehouse supply increased by 8.9% H-o-H, reaching 6.27 million sq m with continued development supporting the growth in supply across various locations, mainly in Chonburi, Samut Prakarn, and Pathumthani. Despite such increased supply, in this period more than 600,000 sq m were taken up the highest take-up rate in the last few years driven by mostly built-to-suit development space for the rapidly growing industries. This trend highlights Thailand’s ability to respond effectively to evolving industrial demands.

The Bangkok Metropolitan Region (BMR) maintained dominance in Thailand’s logistics landscape with 45% of the total supply, while Samut Prakan dominancy was felt in the region, contributing approximately 41% of the total supply. This was closely followed by the EEC, which had a 38% stake in the total stock.

Overall occupancy rate remained firm at 85%, slipping just 3% from the previous year. Despite the slight decline in occupancy rates, the market remains fundamentally strong. The additional stock is being steadily absorbed, reflecting sustained demand across various sectors. The lower occupancy rate is not a sign of weakening demand but rather the result of a faster expansion in supply.

Rental rates were stable at 158 Baht per sq m per month, reflecting a balanced market. The average rate asked was highest for the BMR at 161 Baht, with rates for premium areas reaching 230 Baht per sq m. In the EEC, quality space commanded a slightly softer average rent of 159 Baht per sq m.

Ahead of this, some 239,000 sq m of new warehouse space is scheduled to come, with 59% of this supply concentrated in the EEC. This development pipeline illustrates continued confidence in the logistics market, although developers are carefully monitoring absorption rates to avoid potential vacancies.

Despite growing competition, Thailand’s logistics market continues to benefit from strong foreign investments. Major investors, including those from China, Japan, South Korea, and the Netherlands, bring essential capital and state-of-the-art warehousing technologies, further enhancing Thailand’s competitiveness.

For more detailed insights or property advice, feel free to reach out to the experts at Knight Frank Thailand.