Industry Outlook 2025-2027: Industrial Estate

EXECUTIVE SUMMARY

Total new sales and leases of land on industrial estates is forecast to expand by some 4.0-5.0% annually over 2025-2027, or by approximately 7,000 rai per year. Tailwinds lifting the market will come from: (i) gradual recovery of the world economy and improved investor sentiment overseas, which should then help to boost exports; (ii) the diversion of investment away from the major economies, most obviously China, and towards the ASEAN zone as corporations attempt to hedge against a potential worsening of geopolitical stresses; (iii) an uptick in the pace of work on government-backed infrastructure projects, especially in the EEC; and (iv) government tax and non-tax incentives that aim to boost investment. For their part, operators of industrial estates will tend to transition to the provision of ‘smart parks’ that come equipped with the full range of modern technological services, as well as to focus more heavily on environmental issues as they target industrial clients linked to the bio-circular-green (BCG) economy. Providers will also broaden their business partnerships, thus putting them in a better position to supply their customers and tenants with a fully comprehensive range of services.

Major risk factors that may trouble the market going forward will include the increasing attractiveness of Thailand’s regional peers, which are able to offer greater access to factors of production, and Thailand’s declining competitiveness relative to other countries in the Asia-Pacific region.

Krungsri Research view

• Industrial estates in the eastern region: Revenue will tend to rise at a sharper rate for operators in the eastern region than for those in other areas thanks to strong growth in demand for space to rent or lease. The market will be boosted by government spending on infrastructure, which will then support the further development of the EEC in the three provinces of Chonburi, Rayong and Chachoengsao (and expected to add Prachinburi in 2025), and this will then serve to attract greater interest from domestic and international investors, especially those active in industries that are targeted for support by the Thai government. However, in the coming period, the supply of new space (both new developments and extensions to existing estates) will tend to be limited due to steadily rising land prices and the increasing difficulty involved in finding suitable new locations.

• Industrial estates in the central region: Revenue will tend to grow solidly for players in this group, especially from rents and charges for the supply of services and utilities. This is due to the advantages the central region has with regard to access to transportation networks. However, growth in the supply of space on industrial estates will again be limited, as suitable sites are highly concentrated only in Bangkok, Samut Prakan, Ayutthaya and Saraburi.

• Industrial estates in other regions: Revenue will likely remain flat due to low demand in these areas. Local markets for industrial space continue to be held back by a lack of concrete government action, especially on the build out of communications networks linking these areas to neighboring countries. Industrial estates in this area are likely to experience slower growth compared to other regions, thereby limiting their potential revenue growth.

Overview

Industrial estate is a business to prepare land for lease or purchase by industrial and commercial operators. Providers of industrial estate services also supply businesses located on these sites with access to amenities and utilities including electricity, water, flood defenses, centralized sewage services, and so on.

Within Thailand, industrial estate falls under the oversight of the Industrial Estate Authority of Thailand (IEAT), which manages both: (i) industrial estate that the IEAT owns and operates alone, and (ii) industrial estate that the IEAT owns and operates in partnership with private sector players. In addition to industrial estate, industrial park and industrial zone also exist and these share many of the characteristics of industrial estate, although these are privately owned and run^1/ and fall under the oversight of the Board of Investment (BOI), which has assigned their regulation to Department of Industrial Works provincial offices.

Businesses may prefer to move onto sites on industrial estate rather than build from scratch on empty land because the former are already equipped with the requisite infrastructure, utilities, and transportation links. Establishing operations on industrial estate may also benefit companies financially, since if they do this, they may qualify for incentives provided by the government in the form of tax relief or other forms of investment support. The two major operators of industrial estate in Thailand are Amata Corporation and WHA Group, while Rojana Industrial Park and Navanakorn are the most important operators of industrial park and industrial zone.

The major factors influencing growth in demand for industrial estate are: (i) the state of the domestic and international economies and of local political conditions; (ii) multinational companies’ views on investing and establishing production facilities in Thailand; (iii) the physical and geographical conditions of the country; and (iv) the extent to which government rules and regulations support investment in domestic industrial estates, and the level of concessions and incentives that the government provides for investors in the sector. As of September 2024, there were 70 industrial estates in Thailand, spread across 17 different provinces (Figure 2) and covering a total area of 174,167 rai. Of this total, 14 sites were operated by the IEAT alone, with the remaining 56 being joint ventures with the private sector. The vast majority of supply is located in the eastern region (Figure 3) and so this is home to 78.0% of the total (135,857 rai). As of 2024, 132,430 rai of land on industrial estates had been sold or leased, giving an occupancy rate of 80.0% (Figure 4). In terms of investors’ origins, Japanese operators are by number the most important overseas investors active on the market, followed by those from China and Singapore (Figure 5), while by value, the most important source of funds (measured by applications for investment support) was Singapore. The greatest share of land is occupied by players from vehicles and equipment industries (Figure 6).  

The growth potential of the industry varies from area to area across the country and so details for individual regions are given below.  

• The eastern region: This area has the largest industrial estate area and the highest growth potential since it is home to the Eastern Seaboard Development Program. Businesses are well served by the area’s transportation network, which includes convenient road connections, airlinks (Suvarnabhumi and U-Tapao airports are nearby) and easy access to commercial shipping (Laem Chabang and Map Ta Phut ports are in the same area). Bangkok is also close and easily accessible. In addition, the area is dense with industrial activity, including oil refining and petrochemicals, chemicals, auto assembly and auto parts manufacturing, electronics, and food processing, and as such, the government has provided ongoing support for the development of manufacturing within the region. The outcome of this has then been that not only does the eastern region have the greatest concentration of industrial estates in the country, it also continues to attract the most interest from investors. This is then reflected in the disproportionately large share of applications to the BOI for investment support for projects that are sited in the area (Figure 7). This area extends over the provinces of Chonburi, Rayong, Chachoengsao, Prachinburi and Sa Kaeo.

      Chonburi, Rayong, and Chachoengsao are also home to the Eastern Economic Corridor (EEC) development (Figure 8). This area has been chosen for this strategically important development thanks to the provision of infrastructure in these provinces, and because of this, private sector players can move straight in and begin operations almost without delay. The government is especially hoping that investment will be forthcoming in its twelve targeted industries2/, all of which are technologically and capital intensive. In addition, to keep pace with changes in the global investment environment, the government has established five industrial clusters, each centered around a particular segment of the economy. These are: (i) next generation automotive industries; (ii) digital industries; (iii) medicine and health; (iv) the bio-circular-green economy; and (v) services. This is aimed at aligning with global investment trends.

This hope for EEC to attract more investor is further underpinned by government spending on infrastructure megaprojects that are helping to strengthen the area’s transportation networks and so increase its overall appeal. The government is thus working to attract investment from domestic and international sources for programs including most notably the development of: (i) the high-speed rail link connecting the area’s 3 airports; (ii) U-Tapao International Airport; (iii) the intercity motorway; (iv) the dual-track railway; (v) phase 3 of Laem Chabang Port; and (vi) phase 3 of Map Ta Phut Industrial Port.

As a result of increased government spending on major infrastructure projects, prices for land in the EEC (including on industrial estates) have escalated dramatically relative to their level prior to its establishment. Data from the Real Estate Information Center (REIC) thus show that as of 2023, the empty land price index (i.e., the price for vacant lots) for the EEC was up 107.0% relative to the 2017 baseline, with this rising 120.2% and 96.0% in Chonburi and Rayong, respectively. Over the first half of 2024, prices for vacant lots in the EEC overall and in Chonburi and Rayong in particular were up by another 5.8%, 7.5% and 10.4% YoY, respectively (Figure 9).

• The central region: This area benefits from being a center of manufacturing and the focus of national transportation networks. The central region includes Bangkok itself, which is home to the most expensive industrial land in the country (by area), together with provinces that are home to important industrial estates, including Samut Prakan, Ayutthaya, Saraburi, Samut Sakhon, and Ang Thong. Auto parts, electrical appliance, and electronics manufacturers are concentrated in the area, in addition to industries that utilize local resources, such as food processing and construction materials, together with a large number of factories operated by SMEs.

• The northern and northeastern regions: Generally, industrial estates in these areas host food processing industries alongside some electronics manufacturers, but transportation links are inferior to those in other parts of the country, and this has tended to drag on demand. However, progress on developing road and rail links in the north and northeast that will connect Thailand to its neighbors (i.e., the 323 kilometer stretch of dual-track line from Den Chai to Chiang Rai and to Chiang Khong in the North and the 355 kilometers of dual-track line from Ban Phai to Nakhon Phanom in the Northeast) and then on to China and Vietnam should help to stimulate future investment. At present, industrial estates are located in the northern provinces of Lamphun and Phichit and in the northeastern province of Udon Thani.    

• The western region: Industrial estate in this area is awaiting development opportunities. The Industrial Estate Authority of Thailand had planned to develop a new industrial estate to support and connect to the proposed industrial zone and deep-water port in Dawei in Myanmar, but the importance of the latter has slipped and the authorities in Myanmar are instead now focusing on the development of an industrial area in the Thilawa special economic zone. Given this, the impetus for investing in industrial estates in the western region has slackened, and at present, there is just one industrial estate in Ratchaburi.

• The southern region: This area is being developed with the goal of improving links between the south of Thailand and Malaysia. There are two industrial estates in the area, both of which are in Songkhla and thanks to its local importance, these are largely occupied by businesses connected to the rubber industry. However, the ongoing disturbances in the deep South and subsequent fears over security combined with the insufficient local supply of electricity have meant that development of industrial estates in the South has not proceeded as might have been hoped. The authorities have responded to this situation by trying to attract greater investment to the region. In particular, this has included offering discounts of 3% and 5% to respectively new and existing investors making purchases of land on industrial estates between 15 March and 30 September 2024.

Situation

The growth trend that set in in 2021 continued through 2023, with new sales and leases up another 65.2% to 5,624 rai in the year on an increase in investment inflows into the country. The value of applications and approvals for BOI investment support thus rose by respectively 43.1% and 22.5% following the reopening of the country in the second half of 2021 and the return of foreign investors. In 2023, the new 1,547 rai Nong Lalok industrial estate was also opened in Rayong in the EEC (Figure 10), taking the national total to 68 estates, with a cumulative area of 173,038 rai. The majority of these estates, 44 in total, are concentrated in the Eastern region.

New sales and leases continued to grow through the first 9 months of 2024 as investment strengthened. This came despite delays to the passing of the annual budget that then caused work on infrastructure projects in the EEC to fall behind schedule.

• Two new industrial estates were opened in the first nine months of 2024, covering a total area of 1,303 rai: (1) LPP Industrial Estate in Nakhon Sawan (673 rai) and (2) WHA Eastern Seaboard 3.1 Industrial Estate in Chonburi (630 rai) (Figure 10). This has resulted in a total of 70 industrial estates nationwide, covering a combined area of 174,167 rai. Supply shows a strong degree of geographical concentration, and so 45 of these were in the eastern region. These had a combined area of 135,857 rai, or 78.0% of national supply. The East was followed in importance by the central region, including Bangkok, which was home to a further 17 estates with a total area of 27,083 rai, or 15.5% of the total. Nevertheless, the Industrial Estate Authority of Thailand reports that over the first 11 months of 2024, 11 applications were made to expand existing establish or to establish new sites. These had a combined area of 8,943 rai (Krungthep Turakij, 10 October 2024).

• New sales and leases of land on industrial estates jumped 52.7% YoY to 6,069 rai over the first 9 months of 2024 (Figure 11). Of this total, 90% (5,481 rai) was located in the eastern region, and so with demand up another 55.3% YoY, this remains by far the most attractive area for investors. The east was followed in importance by the central region (including the Bangkok Metropolitan Region), where sales jumped 47.5% YoY to 531 rai. These increases took the total occupied space to 132,430 rai as of the first 9 months of 2024, thus lifting the occupancy rate to 80.0%, up from the 75.7% recorded at the end of 2023. These increases are broadly mirrored in the sales (measured by area) and revenue of the two largest players, namely Amata and WHA Group, which combined rose by 34.6% YoY and 28.9% YoY respectively (Figure 12).

Through 2024, applications for investment support jumped 34.5% to THB 1,138.5 billion, of which 44%, or THB 504.9 billion, was for projects located in the EEC. The latter thus increased 36.6%. Over the same period, the value of projects approved for investment support also climbed 29.7% to THB 973.2 billion, with 67% of this, or THB 652.6 billion, directed to investments in the government’s target industries.

Considering just foreign direct investment (FDI), 2024 the value of FDI inflows into Thailand totaled THB 832.1 billion in terms of applications and THB 727.1 billion in terms of approvals, with the former rising by 24.9% and the latter increasing by 31.6%, respectively. The most important source of funding for approved investment projects was Singapore, which provided 31% (or THB 224.4 billion) of this. Singapore was followed in importance by China and Hong Kong (Figure 13). The combined total of approved investments in the twelve S-curve industries also jumped 29.1% to THB 568.0 billion, and with inflows of respectively THB 256.3 billion and THB 95.2 billion, intelligent electronics and digital industries were the most important recipients of these (Table 1). The total value of BOI investment certificates issued between 2018 and Q3 of 2024 thus comes to THB 1.73 trillion, with China, Japan, Singapore, Hong Kong and the US the most significant sources of funding. ​

The rapid expansion in the value of approved investment projects in 2024, coupled with investment promotion measures aimed at attracting investors, particularly from abroad, is expected to drive continued growth in industrial estate sales and leases through the rest of the year. For the year as a whole, the total footprint of land sold and leased on industrial estates is therefore expected to expand by 28.0% YoY, or by some 7,200 rai.

Outlook

Over 2025 to 2027, new sales and leases of land on industrial estates are expected to increase by 4.0-5.0% per year, or by some 7,000 rai (Figure 14). Factors boosting demand will include the following.

1) An improving outlook for the world economy and strengthening investor sentiment overseas will lift industrial exports.

2) Geopolitical conflicts, along with prolonged or escalating trade tensions between the U.S. and China, are expected to intensify after Donald Trump returns to serve another term as President of the United States. In addition, tensions between China and Taiwan remain unresolved, adding to potential threats to the global economy. Against this backdrop and to lessen the risk of being caught behind rising trade barriers or of being subject to supply chain disruptions, many corporations are looking to relocate production facilities, in particular from China and Japan, to the ASEAN countries. Within Southeast Asia, Thailand is an attractive option given its strategic position in the heart of the region, its role as a center of manufacturing and investment, and the advanced state of its road and rail logistics networks.

3) Progress on government infrastructure megaprojects should accelerate and this will help to increase the integration across transportation networks, and in line with phase 2 of the EEC action plan (for the years 2023-2027), this will especially impact areas in the eastern seaboard. Most notably, this will cover: (i) the high-speed rail-link connecting the three airports of Don Mueang, Suvarnabhumi, and U-Tapao, for which construction is expected to begin by 2025; (ii) phase 3 of the Map Ta Phut Port development (the construction of overall infrastructure has progressed to 80.93% as of June 2024); (iii) phase 3 of the Laem Chabang Port development (the progress of marine construction for the project stands at 29.02% as of June 2024); and (iv) the development of U-Tapao Airport and the Eastern Aerotropolis, where work should begin in 2025. U-Tapao Airport is scheduled to start offering commercial services in 2029 (Table 2), and the completion of these projects will further add to the growth potential of industrial estates in the eastern region. 

4) Government investment support measures have been continuously introduced, particularly BOI and EEC incentives. This includes tax breaks and the relaxation of regulations for investors and the extension and adjustment of other investment promotion schemes, which should then help to pull in increased FDI inflows. Officials have thus extended four major schemes, which should have expired at the end of 2024 but which will now run into 2025. These are: (i) the retention and expansion program; (ii) the relocation program; (iii) the economic growth program; and (iv) measures to encourage investment targeting improvements to the automotive industry. 

Investment into the industry will tend to focus on business transformation, though this will take a wide range of forms.

1) Industrial estates will increasingly become ‘smart parks’ that are fully equipped with modern production technologies and transportation, communication and energy systems, which will then help to increase operating efficiencies and boost competitiveness. This will also include investing in robotics, automation and digital platforms, which will in turn assist manufacturers operating out of these industrial parks to increase their utilization of digital technologies.

2) Players will focus more heavily on issues connected to sustainability and environmentalism as they transition to the development of ‘smart eco-industrial estates’. These provide occupants with improved water, energy and waste management systems and use modern technologies such as AI and the IoT to reduce their environmental footprint (WHA, Thansettakij, 20 November 2024). Naturally, this will also extend to include an increased dependency on sources of clean energy (e.g., solar and biomass) in place of fossil fuels, and the IEAT estimates that switching to the use of renewables will help to reduce carbon dioxide emissions by 70% during the operational phase compared to traditional fossil fuel-using industrial estates.

3) Players will expand their commercial networks by partnering with a wider range of companies, in particular to provide tenants with a full range of transportation, distribution, energy, e-commerce, and waste management services. This will also help operators of industrial estates develop new revenue streams.

Industrial estates in the eastern region, in particular those in Chonburi and Rayong, can look forward to strong growth (Table 3). Demand will be accelerated by both the benefits that come from the location itself and government policy that aims to boost the development of the EEC through ongoing spending on large scale infrastructure projects and the knock-on effects of this on attracting investment in target industries. Most recently, the Eastern Economic Corridor Office of Thailand (EECO) has announced plans to incorporate Prachinburi Province into the EEC, making this the development’s fourth province. This will then help both to encourage and to absorb increased investment inflows now that Rayong and Chonburi are close to capacity (Prachachat, 2 December 2024) while Prachinburi has the potential to host industrial developments and to support ongoing urbanization. A royal decree formalizing the extension of the EEC to include Prachinburi is expected in 2025. (Krungthep Turakij, 23 November 2024).

By contrast, due to a combination of their relative disadvantages and a lack of government action targeting the development of supporting infrastructure, estates in many other locations remain out of favor with investors. Nevertheless, the government set out its policy for the ‘new economic corridor’ spanning the four regions of Thailand in 2022 (Figure 15). This aims to broaden the geographical spread of economic development and to bring the benefits of this to a wider share of the country, partly by improving transportation links with the EEC and with Thailand’s neighbors. This plan will be implemented through the period 2022 to 2032, but it is expected that it may still take some time before clear changes in investment within these industrial estates become evident.

Going forward, the industry will have to contend with a number of challenges, the most important of which will include the following.

1) The relative advantages offered to investors setting up in neighboring countries is a significant challenge to further development of the domestic market. This is particularly the case with regard to access to resources and labor, and so for companies engaging in labor intensive production, investing elsewhere in the region (e.g., in Vietnam) can be a more appealing proposition. Similarly, for companies with a strong focus on high-tech markets, Singapore is an attractive investment target (Table 4). Beyond this, many corporations are now looking to minimize the risk of future supply chain disruptions by diversifying their production base and avoiding any over-concentration in particular countries, and this may further limit the growth potential of the Thai market. The government has therefore rolled out a series of policies that aim to respond more fully to the needs of the market and the changing global business environment, thereby adding to Thailand’s appeal. In particular, these target companies active in the S-curve industries that use modern high-tech production processes.

2) Thailand's competitiveness has lagged behind many countries in the Asia-Pacific region, and although the country improved its ranking from 30th to 25th in the 2024 International Institute for Management Development report (covering 67 countries), Thailand’s position compared to some other countries in Asia is worsening. Thus, Singapore has risen from 4th spot in 2023 to 1st in 2024, Hong Kong (moved up to 5th from 7th in 2023), Taiwan (ranked 8th, down from 6th in 2023), and China (moved up to 14th from 21st in 2023) while Indonesia has climbed to 27th place, only slightly behind Thailand (Table 5). Thailand has fallen behind those countries with regard to metrics for: (i) government efficiency, or the ability of governments to support the economy and to create a business environment that enhances national competitiveness and fosters entrepreneurship; and (ii) business efficiency, or the ability of businesses to successfully achieve their goals, and (iii) infrastructure, particularly in education, which plays a crucial role in developing knowledge and professional skills to meet the demands of investors. These investors are increasingly focusing on a workforce with expertise combined with the ability to apply modern technologies, aiming to enhance competitive advantages.

3) Land use regulations (e.g., planning and zoning laws) are out of sync with current realities in some areas, and this will act as a drag on the development of industrial estates. Given this, the future supply of suitable new space may not be sufficient to meet demand, especially from major overseas investors looking to take occupancy of large sites.

4) The Cabinet approved the Emergency Decree on Top-up Tax, B.E. 2567 (2024), setting a minimum rate of 15%. It has been officially promulgated in the Royal Gazette and will apply to large Multinational Enterprises (MNEs) with annual revenues of at least 750 million euros in at least two of the four preceding fiscal periods. This will be effective for fiscal periods starting on or after 1 January 2025. The measure aligns with the global minimum tax framework to prevent tax competition among countries to attract foreign investment, impacting the investment decisions of some major foreign investors.

1/ The principal differences between on the one hand industrial estate and on the other industrial park and zone are that: (i) foreign companies may purchase land on industrial estate without the approval of the BOI, but may not do so in the case of industrial park and zone; and (ii) the IEAT acts on behalf of businesses on industrial estates as the certifier and provider of a variety of services, such as issuing permits to build and to operate factories, and thanks to the fact that it is a government agency, it is able to have applications for these (made to the Department of Industrial Works) processed more smoothly and more rapidly than can private sector operators. In the case of industrial park and zone, conversely, the operator of the park/zone will itself be responsible for handling these services on behalf of the lessees or purchasers.
2/ The twelve targeted industries are: (i) next-generation automotive industries; (ii) intelligent electronics; (iii) high-value and medical tourism; (iv) advanced agriculture and biotechnology; (v) food for the future; (vi) automation and robotics; (vii) aviation and logistics; (viii) biofuels and biochemicals; (ix) digital industries; (x) medical industries and comprehensive healthcare; (xi) defense; and (xii) education and human resource development.