Escalating trade war a boon for Thailand industrial property as Chinese manufacturers shift production overseas

Thailand’s industrial property sector is profiting from the US-China trade war, as mainland Chinese manufacturers shift production to Southeast Asia in an attempt to avoid escalating tariffs.

Chinese foreign direct investment (FDI) into the sector rose last year by 31.7 per cent to US$233 million, after declining by 15.7 per cent in 2016-17, according to Bank of Thailand data. In the same period, total FDI into Thailand skyrocketed by 130.5 per cent year on year, after rising by two-thirds in 2016-17. Chinese investment accounted for 4.3 per cent of total FDI last year and 7.6 per cent in 2016-17.

The data, cited in a report by real-estate services company CBRE released last week, suggests FDI into Thailand’s manufacturing sector was increasing before the trade war too, and is now seeing increased participation from China.

Last year, sales of serviced industrial land plots – privately owned industrial estates – by major developers in Thailand increased by 50 per cent year on year, to total 160 hectares, CBRE said. One park, specifically developed for Chinese manufacturers by Thai industrial estates provider Amata, accounted for 15 per cent of the total sales last year.

In another instance, Guangxi Construction Engineering Group, one of China’s largest construction companies, formed a joint venture with CP Land, the property arm of Thai conglomerate Chareon Pokphand Group, to build the CPGC Industrial Estate in Rayong in eastern Thailand last August. The 490 hectare space cost 10 billion baht (US$314.8 million) to develop and was built to attract investors from mainland China, Hong Kong and Taiwan in smart electronics, medical hubs, digital and robotics.

CBRE also said China could be in line to take over from Japan, which has been the largest source of investment into Thailand since the late 1980s.