Industrial park developers immune to COVID-19

An industry park in Ba Ria-Vung Tau province. Industrial park infrastructure development companies have not been affected much by the COVID-19 outbreak (Photo: cafef.vn)

Sonadezi Corporation, whose main businesses include industrial park infrastructure development and leasing, reported net revenues of 1.078 trillion VND (46.5 million USD) and net profit after tax of nearly 271 billion VND (11.7 million USD) in the first quarter of the year, a year-on-year increase of 11 percent and 51 percent.

Industrial park leasing accounted for the largest proportion of revenues – of over 27 percent -- with 293 billion VND (12.6 million USD), a year-on-year increase of 66 percent.

Long Hau Corporation, which owns Long Hau Industrial Park in Long An, also reported an increase in both revenues and profits in the first quarter.

Net revenue was 206.4 billion VND (8.9 million USD), up 19.7 percent year-on-year, and gross profit was more than 93.6 billion VND (4.02 million USD), up 20.6 percent.

Revenues from infrastructure rent grew by 21 percent to nearly 159 billion VND, or 77 percent of total revenues, while those from leasing factories and accommodation increased by over 22 percent to nearly 28 billion VND.

Profit after tax was 63.1 billion VND (2.7 million USD), an increase of more than 15 percent year-on-year.

According to real estate consultancy Jones Lang LaSalle, though the pandemic could cause a delay in decisions following lease negotiations, the fundamentals of the market remain strong and would recover after the epidemic subsides.

It said companies looking to diversify their manufacturing portfolio outside China are attracted to Vietnam thanks to its proximity to the former.

"Industrial park developers remain confident that demand for land will continue to grow and therefore land prices are expected to increase in line with the long-term potential of Vietnam’s industrial segment," Stephen Wyatt, country head of JLL Vietnam, said.

Vietnam's industrial land prices rose by 12 percent year-on-year in Q1 as the shift out of China by manufacturing facilities continued.

They rose by 6.5 percent in the north to 99 USD per square metre and by 12.2 percent in the south to 101 USD.

Ready-built factories costing 3.5-5 USD per square meter per month are favoured by businesses as indicated by the high occupancy rates, according to the report.