Capital flows strongly into industrial real estate

Industrial real estate has had easier access to bank credit since July, when the State Bank of Vietnam (SBV) reduced the credit risk coefficient for industrial real estate from 200 per cent to 160 per cent, encouraging commercial banks to lend to more projects in the segment.

Nguyen Van Nguyen, deputy head of the Internal Control Department of the SBV Ho Chi Minh City branch, said, "Credit for real estate development in export processing zones, industrial parks (IPs), and office leasing continues to return high growth rates compared to other sectors."

"Credit for export processing zones and IPs increased by almost 9.5 per cent on-year, while credit for office buildings and high-rises increased by just over 11 per cent," he added.

With profits recorded in Q1 of nearly $32 million, $15 million, $10 million, and $5 million, respectively, IDICO Corporation - JSC, Sonadezi Industrial Zone Development Corporation, Viglacera Corporation - JSC, and Becamex IDC Corporation are forecasted to have good growth prospects this year.

In the market report for the first half of 2024, Dat Xanh Services evaluated that Vietnam's industrial real estate market recorded stability in supply, while demand for leasing grew steadily and rental prices tended to increase slightly.

Pham Anh Khoi, director of the Economic, Financial, and Real Estate Research Institute of Dat Xanh Services, assessed that the supply of the industrial real estate segment in the second half of 2024 will increase slightly in the short term and significantly in the long term as many new industrial land areas are planned.

Additionally, overseas funding in the processing and manufacturing industries is continuously increasing, driving the demand for industrial land and IPs.

“Due to the positive trends in both supply and demand, industrial land rental prices are expected to remain stable or increase slightly in the second half of 2024, with occupancy rates forecasted to rise slightly in both the southern and northern regions. This is partly due to the government's flexible diplomatic policies to attract investment and the economic restructuring process, making industrial real estate continue to be a bright spot in the market in the medium and long term,” Khoi said.

Real estate still beguiling investors Although the real estate market continues to struggle along, the fact that more products are being offered for sale, attracting the interest of buyers, illustrates that it will continue to bring profits.

Real estate sector enticing newcomers The newly released prospectus of Ton Dong A JSC ahead of its 2024 AGM on June 28 shows that the steelmaker is mulling over expanding into real estate and agriculture segments.

Industrial property expanded to welcome foreign-led capital The shift and re-establishment of foreign supply chains are facilitating Vietnam to become a new production hub, ushering in opportunities for industrial park real estate development.