Experts say that the real estate potential of the Vietnamese industrial park is still very large, with two main segments to be exploited, including land leasing and turnkey factory rental.
Land rent in industrial zones continues to rise
At the recent conference of the Vietnam Industrial Estate Forum 2022, most of the speakers said that the real estate potential of the Vietnamese industrial park is still very large. In which two main segments will be operated, including land leasing and turnkey factory leasing.
Experts from Rong Viet Securities (VDSC) expect land rents to continue to rise, not just because demand continues to increase while supply is somewhat limited. Naturally, the costs of compensation and the annual increase in land rent also contribute to the increase in rents. In this context, VDSC believes that real estate developers on industrial estates with available land funds for eviction compensation and land use fees will benefit more, thanks to the low costs while rents gradually increase.
Moreover, Vietnam’s development potential for e-commerce is still very high, with low penetration and high growth. Currently, the overall retail e-commerce penetration rate is only 5.5%, which is just the level of China 10 years ago. Experts therefore highly value industrial estate real estate companies that aim to develop turnkey factories and have land available near urban areas.
According to data from CBRE, the average rent in these areas increased by 13%, 15% and 21% respectively in the fourth quarter of 2021. Rents rose from 17% to 32% for projects in the industrial estate within an hour of commuting to the city center. Similarly, the supply shortage also occurred in the northern region.
New wave of FDI
Industrial real estate has been welcoming foreign investors to the market since the beginning of the year. In particular, Danish jewelry brand Pandora has signed a Memorandum of Understanding for the construction of a new jewelry factory in Vietnam – Singapore Industrial Park III (VSIP) in Binh Duong Province. The German Framas Group is leasing a 20,000 m2 turnkey factory in the KTG Industrial Nhon Trach 2 (Dong Nai) project. Fuchs Group, a German lubricants giant, announced the expansion of its activities in Vietnam at the end of the first quarter with the lease of a 20,000 m2 site in Phu My 3 Specialized Industrial Park (PM3 SIP) in Ba Ria – Vung Ship new build factory.
The central region has also become a destination to attract many new investors such as Arevo Inc. from USA, United States Enterprises of Fujikin Research, Development and Production Center…
Meanwhile, the northern region continues to attract capital flows from investors from Singapore, Korea, Taiwan and Japan – players that entered the market very early and are constantly expanding their scale in the industrial capitals of the north.
According to experts, a new wave of foreign direct investment has been emerging in the past 5 months, as Vietnam has returned to the “new normal” and brought Covid-19 under control. This offers many development opportunities for industrial capitals in the coming period.
VDSC shares the same view, saying that the ability to attract foreign direct investment remains and that the development of e-commerce is driving demand for land leases and turnkey factories.
Ms. Trang Bui, general manager of Cushman & Wakefield Vietnam, told the press that new sources of foreign direct investment pouring into Vietnam’s industrial zones in 2022 will begin to develop in two branches. The first is the manufacturing industry and the second is auxiliary logistics, ie industrial real estate that supports production and logistics.
According to Ms. Trang, with the explosion of e-commerce in recent years, many Asian investors such as Singapore, Japan, Hong Kong, Korea… and a whole group of investors from the US, Europe has also appeared in Vietnam’s industrial real estate market. With a group of investors landing in the Vietnamese market in 2022, there is a tendency to seek increasingly higher quality logistics real estate.
CEO Cushman & Wakefield said Vietnam’s logistics market is still in the early stages of development, but has great growth potential in the next 5-10 years as the Vietnamese government ramps up infrastructure investment. In addition, the strong growth of the middle class with a high disposable income and the strong spread of e-commerce will be the driving forces for the development of the logistics market.
@ cafefu
