Saraburi, Prachin Buri industrial land attractive in wake of floods

About 74 per cent of the factories damaged by last year's massive flood have assumed normal operations, while 30 per cent are still rehabilitating. About 62 per cent of the flood-hit factories decided to relocate to industrial estates in drier areas such as in Saraburi, Prachin Buri and Rayong.

Demand for industrial land has shifted from flood areas to the Eastern Seaboard and new locations including Saraburi and Prachin Buri.

The Eastern Seaboard's popularity is going from strength to strength, but locales such as Saraburi and Prachin Buri could represent the greatest competition to estates in the flood zones, as they were unaffected by the deluge and offer land values at comparable rates. As well, the competition for labour is less intense than on the Eastern Seaboard.

"Nine months have passed since the catastrophic floods struck the industrial estates, crippling global supply chains in various industries, having a major impact on property markets and the Thai economy at large," Marcus Burtenshaw, director of commercial agencies at the international property consultant, said yesterday.

"Most of the factories in the flood zone have already restarted their production, and while we have seen some factories permanently close and/or relocate, we do not foresee a totally bleak future for the flood zone. Indeed, estates such as Nava Nakorn and Rojana are still recording land sales today.

The future of course is still uncertain and much will depend on how Thailand copes with this year's rainy season."

As of July, 74.6 per cent or 663 damaged factories in the industrial estates of Pathum Thani and Ayutthaya had restarted their operations, either partial or full capacity. The production index has returned to pre-flood levels, although there are still many manufacturers that have not yet fully recovered.

Of the factories that have not yet restarted, 81 have indicated an intention to reopen. Of these, 51 are expected to be operational by this quarter, 25 next quarter and five by the first quarter of next year.

Altogether 62 factories have completely shut down or relocated. However, the news is somewhat |better for the 7,893 factories outside of industrial estates in the flood zone, where 97.16 per cent have resumed operations.

Some factories rely on yet-to-be completed governmental protection measures, while others have taken the initiative to self-protect, including constructing floodwalls around factory premises or purchasing flood barriers that can be rapidly deployed by truck and inflated with high-pressure water.

Interestingly, other firms have acquired or are looking for additional production facilities in other locations in Thailand with a much lower risk of flooding, with the intention of either having one serve purely as a backup or of splitting production. The locations that have proved most popular are in Prachin Buri, Chon Buri, Chachoengsao and Rayong.

Demand for manufacturing property is broken down by the number and value of foreign direct investments in various industries, such as agricultural products, services, chemicals and paper, and electronics.

Thailand enjoyed the most growth in the number of projects from the services, chemicals and paper, and electric and electronics products industries. It was found that, despite the devastating floods, or perhaps because of them, foreign direct investment in the first half increased 10.40 per cent to Bt171 billion.

The supply of SILPs (serviced industrial land parcels) in the first quarter reached 118,642 rai, representing an increase of 1.61 per cent quarter on quarter and 4.78 per cent year on year. The take-up was 102,187 rai, for an 86-per-cent take-up rate. Most of the new supply is along the Eastern Seaboard where industrial estates are expanding to cater to increased demand, as their popularity increased when firms sought high ground after the flood.

The factory rental market's occupancy rate was 93.26 per cent in the first quarter, down from 95.07 per cent in the previous quarter. The total supply was 2.3 million square metres, with occupied space at 2.15 million square metres.

The Eastern Seaboard commands the highest factory rental |and occupancy rates in the country. Firms flock here to seek out improved investment privileges, find shorter logistics links to the port and leverage the benefits of existing industry agglomerations.