Ticon Industrial Connection Plc is the country’s largest provider of industrial properties for rent and also a major provider of warehouses to serve companies’ logistics needs. Managing director Virapan Pulges discusses the company’s strategy and outlook.

What are your views on the region and Ticon’s ability to expand to neighbouring countries?

We have begun an expansion into Indonesia with two partners, the Indonesian property developer PT Suraya Semesta Internusa Tbk and Mitsui & Co. Indonesia is an attractive location because of its population, demographics, and the current and potential expansion of businesses. The population is over 240 million people, there is high domestic consumption, 10 million motorcycles are sold per year and 1 million cars; it is a vibrant economy.

With our two partners we feel very confident that our business will succeed and together we have developed the first phase of 34,560 square metres and aim to complete the second phase of 51,000 sq m within this year. What is interesting is that even though it is a “new” country, our customer base is similar because multinationals have a presence in every major developing economy. Thus, from the customers that we service here in Thailand, we can service them as well in Indonesia and other countries in Asean.

Beyond Indonesia, we are looking at Vietnam because of its large population of 90 million, but we do not have a firm timeline.

Do you feel that Thailand has lost its attractiveness as a destination for companies to invest in?

No, Thailand is still very attractive for companies investing in the region. However, the types of customers we have and their nationalities are slightly different today compared with a decade ago. You will recall reports that companies such as Samsung are choosing to invest in Vietnam rather than Thailand, and yes, that is correct, because for low-cost, labour-intensive assembly work Vietnam is indeed more attractive than Thailand. However, the final product is still transported to Thailand and shipped via the Laem Chabang port.

So we see that Thailand is attractive because of its location and logistics strengths for businesses with perhaps more capital intensive manufacturing utilising Thailand’s infrastructure as a distribution hub. Also, with the government focusing on new railway tracks throughout the country, this positioning of Thailand will only become stronger.

How has your customer base shifted over the past decade?

In the past, more than half of our customers were from the electronics industry and from Japan. In the past five years we have witnessed a seismic shift in technology. Several electronic products such as hard-disk drives, fax machines, cameras and so forth, which were a huge component of Thailand’s electronics cluster, have since become marginalised.

Therefore, today we have more automotive customers and while the Japanese customers are still the largest proportion, there has been an increase in companies from China with industries such as renewable energy, mobile phone parts and so on. For the warehouse business, because the locations are ideal as distribution hubs, we serve industries such as consumer products, modern trade, e-commerce and logistics service companies.

How does Ticon cater to the shift in customer types?

We have expanded our product range to include more built-to-suit warehouses. Now when a client approaches us we are able to offer locations in key gateways in a wide range of sizes from 500 up to 50,000 sq m with lease terms from three years up to 15 or 20 years. This combination of location and product offerings is attractive to both local and international businesses that want to expand further in Thailand.

Ticon has both property funds and REITs. What is behind this strategy?

In the early period of Ticon our expansion was rapid and we grew from 100,000 sq m to more than 2 million sq m today. At that time, property funds were the only tool available for us to raise funds without increasing capital or debt in Thailand and we launched three funds.

Recently we launched our first REIT, the Ticon Real Estate Investment Trust (TREIT), managed by our affiliate Ticon Management (TMAN). TREIT will be our core vehicle for growth, with its current size of 7 billion baht. We plan to increase this to 10 billion baht this year by selling an additional 50,000 sq m of factories and 100,000 sq m of warehouses into the fund.

Where do you see Ticon in five years?

This year we plan to add 280,000 sq m of leasable factory and warehouse space with a total budget of 4 billion baht in Thailand and Indonesia. We are also continually improving our operations, becoming more digital in business process management to minimise our carbon footprint and improve our service offerings to clients.

For our warehouses, we have achieved the Leadership in Energy and Environmental Design (LEED) Silver accreditation, which tells both current and potential customers that we have the quality to meet high international standards. With these plans to develop in Thailand and to expand abroad with our partners, we aim to double our current total area of 2.4 million sq m over the next five years around Asean.

Source: Bangkok Post