Insights
Why warehouse rental prices in Thailand have not significantly increased over a 10-year period
Supplier Availability (Vacant Land):
Thailand has an abundance of vacant land, particularly in areas designated for warehouses, transportation, and industrial zones. Many local developers own vacant land, leading to constant construction of new warehouse facilities. The steady annual increase in warehouse supply, around 10-20%, means that the supply is consistently rising in line with, or even outpacing, demand.Demand for Traditional Warehouses:
Post-Flooding (2011): After the 2011 floods, industrial activity shifted from the central region (like Ayutthaya) to the eastern part of the country. While warehouse operations in the central zone remained, manufacturing activity downsized, resulting in a stabilization of warehouse rental prices in these areas. The demand hasn't been strong enough to significantly increase prices. Post-COVID-19 (2019): The pandemic led to a surge in e-commerce, creating more demand for logistics and warehouse space. However, the rapid construction of new warehouses kept up with demand, preventing rental prices from spiking. This indicates that supply is catching up with demand, keeping prices relatively stable.Price War:
After COVID-19, new players entered the logistics and industrial sectors, increasing competition. This intensified price competition, further preventing rental price hikes. The influx of new investors and developers added to the supply, which helped stabilize the market.Emergence of Modern Automated Warehouses:
Modern automation technology in warehouses is gaining momentum. As these high-tech warehouses become more common, traditional warehouse rental prices may remain stagnant for the next 3-5 years. Traditional warehouses might not attract premium prices in comparison to their modern, automated counterparts, which are more efficient and technologically advanced.Conclusion:
The combination of abundant land and increasing supply of warehouses, along with stable demand, price competition, and the rise of modern warehouses, has kept rental prices in Thailand's warehouse market from rising dramatically over the last 10 years.More Insights
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Why warehouse rental prices in Thailand have not significantly increased over a 10-year period
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