q4 2012lOGISTIC PROPERTYREPORT

research

• ThetotalsupplyofwarehousesforrentinQ42012was2,907,907sq.m.,anincreasefromthelastquarterby5.86%and21.95%Y-o-Y.

• Theoccupancyrateinthewarehouserentalmarketwas93.13%,adropfromthelastquarterby0.31%,duetoanincreaseinsupply.

highlight

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Q4 2012lOGISTIC PROPERTYREPORT

Macro economic Overview

TheThaiexportsituationhasimprovedgraduallysincethefloodsoflate2011.DuringQ32012,thetotalexportvaluewas1,880billionbaht.Thevalueofexportsandimportshasbeenontheincreasesincethefloods,andthefiguresseemtoindicatethattheeconomyisontracktowardsrecovery.

Thereareofcoursemanyimportantoutsidefactorsthatcouldhaveadetrimentaleffectonthisoutcome,includingaprolongedorworseningEurozonecrisis,andsetbacksintheUSorChineseeconomies.

Source:BankofThailand

Figure1

Thailand Exports - Imports

TodaytheEuropeanandAmericandebtcrisesareamajorconcerntotheglobaleconomy,lead-ingtheThaigovernmentandprivatesectorstoreducetheirinvestment,consumptionandspend-ing.TheNationalEconomicandSocialDevelopmentBoard(NESDB)reducedtheexportgrowthtargetforthewholeof2012tobeonly5-6%,butrecentannouncementshaveevencalledthoseestimatesintoquestion.

ABangkokPostarticleon27/12/2012quotesSriratRastapana,Director-generaloftheInterna-tionalTradePromotionDepartment,assayingthatthegovernmentstillhopesexportswillendtheyearwith4.17%growth,despiteshipmentsthroughNovemberincreasingbyjust2.32%,andexpressedconfidencethatnextyear’sgrowthwouldexceed5%because“factorieshavenowre-turnedtofullcapacityafterlastyear’sfloodcrisisandonimprovingglobaldemand.”Thearticlealsowentontosaythat“theCommerceMinistryhassetanexportgrowthtargetfornextyearof8-9%to$250billion.”

Asgoodsmaketheirjourneyfromthefactorytotheconsumer,warehousesareneededwhereverthatflowisbroken.Forexample,wheregoodschangetheirmodeoftransportation,say,fromtrucktoseaortoair.Soascountriesinvestininfrastructureandcreatenewtraderoutes,wecanexpecttoseede-mandforintegrated-logisticsspaceincreaseatstrategictransporthubssuchasLaemChabangPort.

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Source:PortAuthorityofThailand

Remark:TEU-Twenty-footequivalentunitcontainer

AccordingtotheAmericanAssociationofPortAuthorities,inyear2010LaemChabangwasranked22ndasthebusiestcontainerportintheworld,andLaemChabangporttrafficisstillgrowingasexportsincrease.Todayitaccountsformorethan80%oftrafficofThailand’stotaloverseastrade.

InQ32012,theLaemChabangportcontainertransitvolumewasmeasuredbythePortAuthorityofThailandasbeing1,535,541TwentyFootEquivalentUnits(TEUs),with797,104TEUsoutboundand738,437TEUsinbound.Thetotalcontainertransitvolumeincreasedfromthepreviousquarterby7.87%.

Figure2

Laem Chabang Port Container Passed Through

Figure3

Bangkok Port Container Passed Through

Source:PortAuthorityofThailand

Remark:TEU-Twenty-footequivalentunitcontainer

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Q4 2012lOGISTIC PROPERTYREPORT

market Overview

TheBangkokportcontainertrafficvolumewasespeciallylowduringQ42011atjust255,854TEUs,asthesupply-chainwasinterruptedbysevereflooding.However,trafficintheportin-creasedthroughout2012.ByQ32012,thetotalcontainertrafficmovingthroughKlongtoeywas359,635TEUs;thetotaloutboundvolumewas146,894TEUs,anincreasefromthepreviousquar-terof11.28%,andupby28.44%Y-o-Y.However,whilstthisrecoveryisencouraging,theoveralltrendisstillsomewhatdownwardasmoreandmorefreightgetsshippedviaLaemChabang.

Figure4

Warehouse Rental Market

Source:KnightFrankThailandResearch

Aninfluxofnewsupplyhascausedaverageoccupancyratestofall,yetthemarkethasbeenquicktoabsorbnewsupplyinrecentquarters.Weexpectthisnewsupplytocontinuetobetakenupquicklyasdemandforwarehousingspacegrows.

Figure5

Net Absorption

Source:KnightFrankThailandResearch

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Averageoccupancyratesofthewarehouserentalmarketdroppedfromthelastquarterby0.31%to93.13%,duetonewdevelopmentcompletions.However,inQ42012,thetotalamountofspaceoccupiedincreasedby141,462sq.m.,indicatingpositivenetabsorptionamidstrobustdemandforwarehousingspace,particularlyinSamutPrakarnandalongtheEasternSeaboard.

supply

Warehouse Rental Market Bangkok Rama 2 -

Samut SakhonPathum Thani

- AyutthayaSuvarnabhumi -

BangpakongEastern Seaboard

Occupancy 95.10% 92.34% 94.63% 93.04% 84.62%

Table1

ThetotalsupplyofwarehousespaceforrentinQ42012was2,907,907sq.m.,whichincreasedfromthelastquarterby5.86%or21.95%Y-o-Yasanadditional160,988sq.m.ofnewsupplyenteredthemarket.

Figure6

Distribution of Warehouse Space by Location

Source:KnightFrankThailandResearch

Source:KnightFrankThailandResearch

SamutPrakarncurrentlyhousesthemajorityofThailand’swarehousingsupply.ItslocationjustoutsideofBangkokallowsconvenientaccesstoseveralindustrialestates.Also,itissituatedbe-tweentwomajorseaports,andishometotheinternationalairport.Despitetheconcentrationofsupplyinthisprovince,wesuspectthattheEasternSeaboardwillseethemostnewsupplyoverthecomingfewyears,asnewlogisticsparksinRayongandChonburipickupsteam.

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Future supply

Q4 2012lOGISTIC PROPERTYREPORT

Project Location Total Size (sqm) Completion

HemerajLogisticPark3(Phase1) Chonburi 18,656 Q12013

SKHWarehouse1 SamutPrakarn 40,035 Q12013

WashingtonTown SamutPrakarn 9,720 Q12013

RichFactory SamutPrakarn 15,655 Q12013

WHAPhaholyothin Ayutthaya 62,000 Q12013

PKPark(Phase1) SamutPrakarn 9,720 Q22013

ThrivenGroup SamutPrakarn 20,184 Q22013

WHABangna SamutPrakarn 53,130 Q22013

HemerajLogisticPark4 Rayong 28,401 Q22013

TPARKEasternSeaboard1(B) Rayong 41,000 Q22013

TPARKAmataNakorn(expansion) Chonburi N/A Q42013

SKHWarehouse2 SamutPrakarn 20,000 Q42013

TPARKEasternSeaboard1(C) Chonburi N/A 2014

TPARKEasternSeaboard2(B) Chonburi N/A 2014

HemarajLogisticPark3 Chonburi 62,000 N/A

WHAAmataNakornI.E. Chonburi N/A N/A

PKPark SamutPrakarn 75,328 N/A

Table2

Source:KnightFrankThailandResearch

Warehouse Rental Market

Rental Rate (THB/sqm/Month) by Locations

Bangkok Rama 2 - Samut Sakhon

Pathum Thani - Ayutthaya

Suvarnabhumi - Bangpakong

Eastern Seaboard

Prime 177.05 166.14 191.63 167.06 167.50

Secondary 121.23 117.92 136.52 115.39 132.05

Warehouse Rents in Key Logistics Locations

Source:KnightFrankThailandResearch

Warehouserentalratesvarydependingonbuildingage,specifications,condition,andlocation.Mostoftheprimewarehousesaremoderndistributioncentres,offeringraisedfloors,docks,andceilingsofatleast10m.inheight.

Rentshavenotwitnessedmuchfluctuation,thanksinparttonewsupplythathasincreasedinlinewithincreaseddemand.

Thesecondarymarketismarkedlycheaperonaveragebutquality,age,andconditionareoftenreflectedinthepricedifferential.

Table3

outlook Robustdemandinthewakeoftherecoveryoftheexportsectorhaspiquedtheinterestoflocalinvestorsinlogisticproperties.Consequently,KnightFrankhasseenanumberofnewprojectsentertheplanningstage.

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appendix: Warehouse Rental Market:purposebuiltwarehousesforrentfromallmajordevelopers,butnotlimitedtoindustrialestatelocations.

Prime Warehouse Market :readybuiltwarehousesthatcommandandachievethetop10%inhighestrentsfortheirsector.

Knight Frank Research provides strategic advice, consultancy services and forecastingto a wide range of clients worldwide including developers, investors, fundingorganisations, corporate institutions and the public sector. All our clients recognisethe need for expert independent advice customised to their specific needs.

Knight Frank Research Reports are also available at www.knightfrank.com

© Knight Frank LLP 2013

This report is published for general information only. Although high standards have been used in thepreparation of the information, analysis, views and projections presented in this report, no legal responsibilitycan be accepted by Knight Frank Research or Knight Frank LLP for any loss or damage resultant from thecontents of this document. As a general report, this material does not necessarily represent the view ofKnight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in partis allowed with proper reference to Knight Frank Research.

Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934.Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.

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