Industrial real estate spearheads sector restoration

The Ministry of Construction’s market report for the third quarter of 2023 released last week assessed that in recent times, the trend of shifting investment capital flows of multinational corporations into Vietnam has continued, causing demand for industrial park (IP) real estate to continue positive grow.

A view of the Vietnam-Singapore IP (VSIP) in Binh Duong (Photo: VNA)

High occupation rate is seen in most Level 1 IPs in hub cities and provinces of Dong Nai, Binh Duong, Long An, Bac Ninh, Thai Nguyen, Haiphong, and Hai Duong.

In particular, the occupancy rate of IPs in the north and south economic hubs both maintains about 85-90 per cent for both types of industrial land, factories, and ready-built warehouses.

In the first 10 months of 2023, tenants from China, Vietnam, Japan, the US and the European Union are investors actively looking for industrial land and warehouses in the Vietnamese market, accounting for about 70-80 per cent of rental inquiries. The country now has 400 IPs nationwide, focusing mostly in the northern and southern key economic regions.

The advantage of the north region is its developed road network, strengthening connections between Hanoi and key industrial provinces, and seaports creating convenient links to international markets such as South Korea and China, thereby strengthening the region’s industrial competitiveness.

The south, meanwhile, is currently implementing projects on Ring Road 3 (expected to be completed in 2026), Ring Road 4 (expected to be completed in 2028) and Ben Luc-Long Thanh Expressway (expected to be completed in 2026).

Long Thanh International Airport in the southern province of Dong Nai has begun construction, and all phases of the super project will be completed by 2050. Terminal 3 of Tan Son Nhat International Airport is expected to go into operation in the second half of 2025.

The past two years have witnessed important milestones for the growth of the industrial sector in the Mekong Delta. In September, investor Vietnam-Singapore IP started construction on the first project in Can Tho city over an area of 900 hectares, expected to be a complex of industrial, high-tech, services, and residential centre.

Meanwhile, solar producers noted a shift north. Three of the top five manufacturing projects in the Northern Key Economic Zone recorded in 2022 were related to solar energy production. Among them, Trina Solar is the largest investor with a project worth $275 million in Yen Binh IP of Thai Nguyen province. Investors mostly come from China, Hong Kong, and Singapore.

According to JLL Vietnam, in the fourth quarter, the southern region will welcome more than 460,000sq.m of warehouse space ready to enter the market, mostly developed by BW Industrial Development, LOGOS, Emergent Capital Partners, Frasers Property, and Cainiao.

By the end of the year, the market size will be expanded to 2.3 million sq.m, an increase of nearly 1.3 times compared to the current size.

Trang Le, head of Research and Consulting at JLL Vietnam, forecast that in the short term, the logistics market’s driving force will continue to be provided by domestic demand. “Along with global trends, cross-border trade activities are projected to show signs of recovery but at a slow pace,” Trang said.

In this context, businesses with large amounts of available land ready for lease are considered to hold many advantages.

In an analysis report released in October, Vietcap Securities said that Long Hau 3 IP has completed 91 per cent of compensation procedures. It is estimated that the remaining available land that can be rented is about 44ha, which could bring in revenues of $108 million at an average price of $246 per sq.m per lease term.

Similarly, VCBS Research Securities forecasts that Urban and Industrial Park Development and Investment Corporation’s (IDICO) business results will grow strongly in the coming time thanks to owning a portfolio of 10 IPs, concentrated mainly in major economic key regions in the north and southeast. IDICO currently has more than 675ha available for rent in Long An, Ba Ria-Vung Tau, Bac Ninh, and Thai Binh provinces.

Meanwhile, Viglacera owns and operates 12 industrial properties covering 740ha of land for rent in Bac Ninh, such as Yen Phong IIC, Yen Phong MR, and Thuan Thanh, all bringing high and promising rents and revenues.

Similarly, Sonadezi Corporation also recorded $54 million of revenues in the third quarter, mostly from its IP activities.

Industrial real estate witnesses robust growth in Q3 Vietnam's industrial real estate sector has shown remarkable signs of growth in the third quarter of 2023, with substantial new project launches contributing significantly to the market.

Industrial real estate developers ready to seize on economic rebound As Vietnam's economy is forecast to rebound in 2023, industrial real estate developers are looking to capitalise on opportunities in the market.

Industrial arena blooms with activity Despite a gloomy picture spreading in other segments of the property market, industrial real estate continues to develop strongly with a range of projects commencing.