MarketView Thailand Industrial FIRST QUARTER 2008

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1 MarketView Thailand Industrial FIRST QUARTER 2008 The sales of Serviced Industrial Land Plots (SILPs) in Q totaled 1,192 rai (476.8 acres), a 48% decrease quarter-onquarter (q-o-q) and an 82% increase yearon-year Together, these companies command a market share of 83% of the total industrial land sales during Q1, 2008 and 71% during (y-o-y). The occupancy rate increased by 1.2% q-o-q and 3% y-o-y to 87.8% on the back of strong demand from the automotive sector and the lack of any new The total supply of Ready Built Factories (RBFs) was 512 factories, with 16 new factories completed during this period. The demand for RBFs has remained supply during the first Applications for eco-car solid, as renting property quarter of is preferred in the current projects from Honda, Suzuki, uncertain conditions. This Applications for Ford-Mazda, Nissan, Tata is confirmed by the eco-car projects from Honda, Suzuki, Ford- Mazda, Nissan, Tata Motors, Toyota and Mitsubishi have already been approved. occupancy rate which was 81.5% in Q1 2008, a 1.7% increase q-o-q. Motors, Toyota and Mitsubishi have already been approved and the first of these plants are expected to begin operations in Foreign Direct Investment (FDI) in the industrial sector over the first two months of 2008 totaled USD 530 million, a 103% The total supply of SILPs did not change during Q The cumulative total stock is 97,564 rai (39,025.6 acres). increase y-o-y. FDI from represented 32% of the total FDI in Thailand in Jan-Feb of 2008, followed by USA at 16%. QUICK STATS Change in Change in Q4 07 Q1 08 Demand Supply Rent Vacancy The Board of Investment's (BOI) Zone 2 remained the most popular location for industrial estates, and 95.1% of sales in the first quarter of 2008 were in Zone 2. Three major industrial estate developers are listed on the Stock Exchange of Thailand (SET): Amata Corporation Plc, Rojana Industrial Park Plc, and Hemaraj Land and Development Plc. The total value of BOI-approved projects was THB 43.6 billion, a 75.2% fall y-o-y. There were 273 projects approved in the first three months of 2008 which demonstrated a 22% decrease y-o-y. Over the same period of time, the total registered capital was recorded at THB 21.7 billion, a 35.6% increase y-o-y. A 110% increase in the total registered capital from the foreign sector was recorded during Q www cbre co th

2 FDI Inflow Breakdown by Country (2007) Other 34% 32% Asian ex- Singapore 4% BOI Approved Projects, Q Netherlands 6% United Kingdom 3% Germany 5% United States of America 16% Q Q % Change Y-o-Y No. of Projects 1, ,227 1,254 1, % Total Investment % Total Registered % Capital Thai % Foreign % Zone % Zone % Zone % TOTAL % Source: Board of Investment SUPPLY There was no new supply of SILPs in the first quarter of 2008, and the total supply has remained unchanged at 97,564 rai (39,025.6 acres). A total of 8,000 rai (3,200 acres) of SILPs was under development, all located in BOI Zone 2. The Eastern Seaboard (Chonburi, Rayong and Chachoengsao) has remained the most popular location for future SILPs due to the proximity to the port and better logistical infrastructure. Amata will add 1,000 rai (400 acres) at Amata Nakorn in Chonburi. A completion date has not yet been announced. Hemaraj is continuing with the large-scale expansion of its Hemaraj Eastern Seaboard Industrial Estate, with 4,000-5,000 rai (1,600-2,000 acres) of land currently under development. An exact figure for the expansion area is not available. A total of 1,800 rai (720 acres) of SILPs are being developed by Rojana in Ayuthaya province. The completion dates range from The Wellgrow Industrial Estate in Chachoengsao province has plans to develop approximately 100 rai (40 acres) in its second phase of expansion. Completion is scheduled for later this year.

3 Thai Factory Development (TFD), a major player in the RBF market, is developing the TFD Industrial Estate, located in Chochoengsao province. The first phase of the development comprises approximately 500 rai (200 acres), with prices starting at THB 6 million/rai. DEMAND The total sales of SILPs in Q were 1,192 rai (476.8 acres), a 48% decrease q-o-q and an 82% increase y-o-y. A slight increase in the total occupancy of SILPs was the result of no new supply being added to the market. Hemaraj achieved the single largest transaction during Q with its sale of 412 rai (164.8 acres) to Suzuki at the Hemaraj Eastern Seaboard Industrial Estate in Rayong. The BOI's eco-car initiative was announced in June Automotive companies plan to invest and expand their capacity for eco-car projects during Automaker investment plans and capacity expansion during Company Model Type Investment (THB million) Capacity (Unit/year) Location Honda Eco-Cars 6, ,000 Rojana Industiral Park, Ayutthaya Sedan 7, ,000 Suzuki Eco-Cars 9, ,000 Hemaraj Eastern Seaboard, Rayong Ford-Mazda B-Cars 20, ,000 Rayong Nissan Eco-Cars 5, ,000 Samutprakarn Tata Motor Eco-Cars 7, ,000 In negotiations Pick-up 1,300 35,000 Toyota Eco-Cars 5, ,000 Gateway City, Chaceongsao Mitsubishi Eco-Cars 4, ,000 Laemchabang Industiral Estate, Chonburi Volkswagen* Eco-Cars 27, ,000 - Note: *Volkswagenÿs application for its eco-car project has not been approved yet and the process may take longer than usual due to lack of an existing production base in Thailand. Source: Board of Investment, Thailand Manufacturing Production Index (MPI) increased by 10.6% q-o-q and 12.9% y-o-y, driven by the food sector which grew by 60.9% q-o-q as commodity prices continued to surge. The largest portion of MPI consists of electronics & electrical products, up 28.3% y-o-y but down 7% q-o-q. Industrial Capacity Utilization (ICU) was 76.3, up slightly by 0.2% y-o-y but down by 1.8% q-o-q. Growth in ICU was led by the food sector, which grew by 49.4% q-o-q to 88.1 while chemical products (92.1) have been running near capacity recently, and future demand for industrial space to expand capacity is expected. Manufacturing Production Index and Capacity Utilization Index, 2002-Q Q1 % Change 2008 Q-o-Q Y-o-Y Manufacturing Production Index % 12.9% Capacity Utilization % 3.6% Source: Bank of Thailand

4 WAREHOUSES AND FACTORIES FOR RENT A total of 16 new factories were completed; 12 factories by Ticon and 4 factories by Hemaraj in Q1, The total stock of RBFs grew by 3% q-o-q and 11.5% y-o-y. Ticon continued to lead the way, with 40.4% of the total RBF supply, followed by TFUND (26.8%) and Hemaraj (13.7%). Market Shares in the RBF Market by Developer, Q Pinthong, 7.9% Others, 11.2% TICON, 40.4% Hemaraj, 13.7% A total of 59 RBFs were under construction in the first quarter of 2008 by Amata Summit Ready Built (ASRB), Ota Techno (by Amata) and Ticon. Generally, it takes six to eight months to complete a new factory for rent, depending on many factors including building size, weather conditions and other specifications. The demand for RBFs remained strong. The total leased area increased by 2% while total supply grew by 4.9%. The occupancy rate of RBFs was 81.5% in Q1 2008, up 1.7% q-o-q. TFUND achieved the highest occupancy rate during Q at 93.8%, followed by Amata at 90.7%. The calculation of the RBF figures is based on supply and take-up data which excludes pre-leased RBFs. PRICES & RENTALS SILP prices increased slightly in all areas during Q1 2008, especially at the lower end while RBF rents remained mostly flat during Q SILP prices are forecasted to adjust upwards in the near future, due to rising construction costs. An increase of 5-10% per rai is expected at major industrial estates. Asking Prices in the Eastern Seaboard, 2000-Q Unit: THB Million/Rai Year Chachoengsao Chonburi Rayong Q * Note: *This range of price is not included Wellgrow industrial Estate which post the asking price at an average THB 7.5 million per rai Source: CBRE Research Services TFUND, 26.8%

5 PROSPECTS A number of eco-cars projects are underway in Thailand and it is expected that parts suppliers and other support industries will follow. FDI inflow is expected to increase further as political concerns decrease and investment in the automobile sector picks up. Much depends on the policies instituted by the new government, which has already stated its expansionary intentions. INDUSTRIAL PROPERTY DEFINITION CB RICHARD ELLIS INDUSTRIAL SERVICES Our industrial services team has advised both local and foreign clients on the acquisition, leasing and sale of all kinds of industrial properties. Our dedicated team draws on the depth of its market knowledge and experience to provide the most comprehensive and highest quality service to our clients. SILP Serviced Industrial Land Plots are subdivisions located on industrial estates, parks and zones specially for industrial use where all services are provided up to the site boundary. 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Rai Rai is a land area measurement used in Thailand with 1 rai equivalent to 1,600 square metres. For industrial requirements, please contact Industrial Services Team Tel: ext Fax: bkk_industrial@cbre.co.th all rights reserved. We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. We specifically exclude any responsibility or liability whatsoever in connection with any purchases, developments or loss of profits arising from reliance on this report.