Industrial parks in Ho Chi Minh City, Hanoi, Dong Nai, Bac Ninh, Binh Duong have the occupancy rate of 89-99%, vacant land is very little, rent increases 5-10% per year.
The recently released Savills Vietnam report shows that industrial real estate rental prices are still escalating during the new epidemic due to the weakening existing supply. The fact that the existing supply has almost filled up and the new supply needs more time to prepare for launch, has created leverage that causes the rental cost of industrial real estate to skyrocket. These indicate that the market is still in a high bull cycle.
The latest industrial real estate market data of this unit recorded an increase in occupancy rate in the northern key economic area over the same period. The occupancy rate in Hanoi is up to 90%, Bac Ninh (up to 95%), Hung Yen (89%) and Hai Phong (73%). Meanwhile, the southern area recorded the occupancy rate in Ho Chi Minh City at 88%, Binh Duong at 99%, Dong Nai (94%), Long An (84%), Ba Ria - Vung Tau (79%).
Image: Phu My 3 Specialized Industrial Park
Although the cost of renting industrial land has increased, a report by Savills Vietnam from 54 markets in 21 countries shows that Vietnam is currently the place with the lowest operating costs in the ranking, becoming a very attractive destination for multinational companies. At the same time, from 2020, the Government of Vietnam has been planning to invest in infrastructure and industrial parks to attract businesses in the supply chain. Timely policies such as corporate tax exemption and reduction ensure competition in the region such as Indonesia, Thailand and other Southeast Asian countries.
The fact that industrial parks do not have much existing supply leading to an increase in rents also brings a positive business picture for industrial real estate giants despite the re-emergence of the pandemic and complicated developments. There are many signals that 2021 will be a prosperous year for industrial real estate developers who already have a large land bank.
Compared to the general level of the world, Vietnam is still considered a country with good disease control, and also benefits from the wave of investment shifting away from China. Therefore, the demand for industrial real estate increased, leading to better business results of some enterprises in this industry in the first quarter of the past year.
Troy Griffiths, Deputy General Director of Savills Vietnam confirmed, when the US-China trade war has not shown any signs of cooling down, many companies have applied the China + 1 model to look for new locations to diversify and secure supply. With its adjacent location to China, as well as converging many strategic advantages, especially the very competitive industrial real estate rental costs, Vietnam is being interested by many domestic and foreign businesses and considered as an alternative destination to China.
Mr. Troy Griffiths analyzed, thanks to the Free Trade Agreement between Vietnam and the European Union countries EVFTA signed in August 2020, the cost of renting industrial park land has grown quite steadily. The planned industrial parks are expected to be the objects to attract foreign capital in the near future.
Through the Free Trade Agreement, the cooperation relationship between the EU countries and Vietnam will be strengthened, promoting the recovery of the manufacturing industry after the quiet period caused by Covid-19. The free trade agreement will also add impetus to the transition from low-value, labor-intensive and low-skilled industries to high-value industries.
"Industrial real estate will continue to be the darling of the real estate industry in general, with high demand and increased capital market activity," said Troy Griffiths.
Source: VNExpress