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News Release

Bangkok

Three Months on, Tohoku Earthquake Shows Minimal Impact on Thailand’s Real Estate Market


7 June 2011 - Japanese corporations represent a major source of demand for property in Thailand. Almost three months on, following the Tohoku earthquake that hit Japan on March 11, Jones Lang LaSalle’s observation reveals that the effect of the natural disaster on Thailand’s property market has been limited.
 
Mr. Yukinori Kishi, Head of Japanese Business of Jones Lang LaSalle in Thailand, commented, “We have not seen any significant impact from the Tohoku earthquake on Thailand’s property market, particularly in the industrial and office sectors.”
 
The earthquake and tsunami that hit eastern Japan in March have resulted in disruptions in the supply chain in the Tohoku district, which is one of the country’s major manufacturing hubs. Production plants as well as supply chains in the area were badly damaged. Factories that have been less damaged can operate only three to four days a week due to electricity shortages following the nuclear plant crisis in Fukushima.
 
Many Japanese manufacturers in Thailand that rely on production supply from Japan have been affected, particularly the automobile sector. Some of these companies have put their expansion plans on hold. As a result, some office leasing transactions in Bangkok and acquisitions of industrial properties by Japanese companies in Thailand in industrial areas such as Ayuttaya and Eastern Seaboard have been delayed for a few months.
 
Nonetheless, among Japanese corporations’ property acquisition/expansion plans in which Jones Lang LaSalle has been involved, the Firm has not seen any cancellations. ”Most Japanese companies in Thailand have continued to expand. We have also seen more Japanese business set-ups in the country.”
 
“In fact, since the beginning of 2011, we have seen stronger demand in office and industrial sectors from Japanese companies in Thailand as compared to 2010,” said Mr. Kishi. “The trend of some Japanese companies putting their expansion plans in Thailand on hold will be only temporary. The fact that most Japanese automobile companies in Thailand have recently resumed full production exemplifies the case,” he added.
 
“However, while effects of the Tohoku earthquake are still unfolding, it may be too early to say if the current trend will continue. We need to monitor the situation very closely for some more months,” Mr. Kishi commented.
 
“As the impact of nuclear threat has become more crucial than the earthquake, many factories located near Tokyo cannot resume full production due to power supply shortage. Going forward, it is possible that some companies in Japan may consider relocating their production facilities to other countries in Asia to diversify risks and sources of procurement, following the lesson learned from the Tohoku earthquake and nuclear threat,” he continued.
 
China and South East Asia are likely to be the top destinations most preferred by Japanese companies due to competitive costs, according to Mr. Kishi. “Thailand has a strong potential to attract Japanese companies as it has established industrial agglomeration, good supply chain, improved infrastructure, and adequate skilled labor. Political stability is the key that the country needs to unlock this potential,” he concluded.