Industrial real estate increasingly lucrative

FiinRatings, a financial data, business information, and industry research company, has noted that during a period of uncertainty from 2021-2023 industrial real estate developers had stable business, mirrored through high occupancy rate at their industrial parks (IPs). By the end of Q1 of 2024, the country was home to 418 IPs, including four export processing zones. Of which 298 IPs have become operational and 120 IPs are under construction.

Operating IPs report occupancy rate surpassing 75 per cent, with those located in northern key localities having leased rate reaching 82 per cent, and those located in key southern localities had a leased rate touching 92 per cent.

“My big mistake is solely focusing on urban area development, while neglecting IP ventures, having wasted significant income sources. The opportunities are coming, now, in the face of eco IP development. We would lag behind if not striving to avail of the opportunity. All urban zones are now being oriented to follow such development orientation,” said Nguyen Thien Tuan, chairman of the Board of Directors at Development Investment Construction Corporation (DIC Corp) at the company’s 2024 annual general shareholders meeting on April 26.

Eying the huge potential of industrial real estate segment, Tuan unveiled that the company is paying attention to four land areas set for IP development.

This includes a 1,000-hectare Chau Duc II area included 400ha set for urban zone development in the southern province of Ba Ria-Vung Tau; a 270ha Pham Van Hai area in Ho Chi Minh City, a 400ha area belonging to Hang Gon industrial zone in the later part of Long Thanh-Dau Giay Expressway in Dong Nai province, and a land area belonging to Long Son IP also in Ba Ria-Vung Tau province.

“We will focus on developing the eco IP model. The leasing rate might go up one and a half, and even be doubled if we succeeded in turning existing IPs into eco IPs,” said Tuan.

Similarly, Saigon Thuong Tin Real Estate JSC (TTC Land) is set to expand into industrial real estate and logistics services in the southern region in the forthcoming period.

The move is expected to help the company develop sustainably.

Vietnam Construction Import-Export Corporation aims to deepen its roots in the industrial real estate segment as this March the company got the greenlight for infrastructure development at Dong Anh IP in Hanoi’s suburbs over nearly 300ha space with a total investment value reaching $264 million.

Investment would follow two phases, with phase 1 embracing 179ha area, and phase 2 around 120ha area.

Son Ha Group marked official debut on industrial real estate field last year when the company kicked-off the construction of SHI IP Tam Duong in the northern province of Vinh Phuc last April.

This 162ha IP worth $65.6 million in total investment value marks Son Ha’s investment expansion as the company has become well-known as a leading stainless steel water tank maker in Vietnam.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors revealed that in Q1 of this year, the real estate market welcomed a string of new IP projects, either having their investment policies approved, or commencing successive stages.

“Industrial real estate continues to be a stellar point in the realty market this year and beyond,” said Dinh.

New capital sources for real estate must be unlocked The real estate market not only needs solutions from credit and corporate bonds, but most importantly, it must open up capital flows from society, from investors and home buyers.

Industrial real estate emerges out of storm The industrial real estate segment has emerged as a driver of the property market after sailing through the economic storm last year thanks to the foreign direct investment (FDI) influx, experts have said.

Binh Duong aims to attract investments for new-generation industrial parks This year, Binh Duong province plans to attract 130-140 investment projects to industrial parks (IP), securing 1.2-1.3 billion USD from foreign capital and 1.1-1.2 trillion VND (about 48.535 million USD) from domestic investors.