Integrated factory spaces on the up

Integrated factory spaces on the up - illustration photo /idico.com.vn

In October, Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO), a well-known local player in industrial property, revealed its plan to invest in its first integrated project, Vinh Quang, in a 495-hectare land plot in the northern port city of Haiphong.

Founded in 2000, IDICO currently has 12 projects in industrial zones (IZ), power, transport infrastructure, housing, and urban development.

At a shareholder meeting on October 12, IDICO CEO Dang Chinh Trung said that the company is currently developing a total of 1.500ha of land. In the next five years, IDICO will develop another 1,400ha in new IZs in Thai Binh, Tien Giang, and Haiphong.

“We are not only focusing on IZs but also urban development to achieve sustainable development for our project sites,” Trung said.

In the southern province of Long An, TIZCO JSC and Vietnam Innovation Parks Group in September announced that they had finished land clearance and compensation for Viet Phat Industrial Park (IP). With a total area of more than 1,800ha, this park is one of the country’s largest and combines industrial property and urban development, with the latter amounting to 625ha.

In August, Korea Land & Housing Corporation (KLH) held a webinar with Hai Duong People’s Committee to propose investing in the Dai Hung complex, which includes industrial, residential, and commercial functions on 304ha.

“We confirm that the Dai Hung complex is appropriated for our province’s green development and digitalisation orientation, said Pham Xuan Thang, Secretary of Hai Duong Party Committee “We will focus our efforts to support the investors in implementation.”

KLH is one of the leading groups in South Korea, significantly invested in housing, smart cities, and industrial complexes.

Pham Hong Diep, chairman cum CEO of Shinec JSC, a developer focusing on building green IZs combined with urban areas, said that the trend of developing synchronous and modern IPs with science and technology and urban development would multiply.

However, according to Diep, time, money, and procedures remain a barrier. “We need to integrate all related laws on investment, land, housing, and construction as well as decrees and circulars to attract more investment into industrial property,” Diep said.

The most crucial factor for developing an IZ with urban areas, according to Diep, was the connection and support between these two functions. Moreover, combining those two would require a large area of land. “Long-lasting land clearance and compensation, in addition to other legal procedures, are the main challenges for developers and need a long time to solve,” said Diep.

Shinec JSC is now developing Nam Cau Kien IP located in Thuy Nguyen district of Haiphong, one of the first eco-IPs with a standardised management system towards protecting the environment.

Besides this, Shinec is expanding and replicating the eco-industrial parks and clusters in other provinces such as Thai Binh, Hai Duong, Quang Nam, Gia Lai, and Thai Nguyen, with the total land fund amounting to 2,000ha in 2022.

In its draft decree to replace Decree No.82/2018/ND-CP on industrial and economic zones, the Ministry of Planning and Investment added articles to encourage developers to build industrial property in combination with urban development areas.

Potential tenants may find a home in the suburban areas or second-tier cities and provinces close to Hanoi and Ho Chi Minh City, where there is still much room for growth.

According to a report released on October 14 by CBRE Vietnam, this trend is caused by the much lower rent in suburban and neighbouring provinces and the shrinking vacant space in the cities.

Rents in Hanoi and Ho Chi Minh City are much higher than those in neighbouring provinces. In Ho Chi Minh City, the current rent is $180-300 per square metre per term. In Hanoi, this figure is $175-260 per sq.m. Meanwhile, rents in second-tier provinces are almost half of this, and even lower in the northern provinces of Hung Yen and Hai Duong.

Regardless of the high rents, the inner-city IZs of Hanoi and Ho Chi Minh City are almost entirely occupied.

As a result, neighbouring provinces are improving their connection with major cities due to a range of newly built infrastructure systems, such as Trung Luong-My Thuan Expressway, Dau Giay-Phan Thiet Expressway in the south, or Van Don-Mong Cai and Ninh Binh-Haiphong expressways in the north.

In the southern region, Long An, Binh Duong, and Dong Nai are hotspots for industrial property since they have an excellent connection to Ho Chi Minh City and the port system nearby.

According to JLL Vietnam, in the first three quarters of this year, due to the heavy impacts of the pandemic, the industrial real estate market in the south stayed silent, with no new IZs launched.

Southern IZs have a total leasable land area of more than 25,220 hectares as of the third quarter.

The northern provinces, meanwhile, are vibrant with new supplies in industrial land. In the northern province of Bac Ninh, Viglacera’s Yen Phong 2C IZ has completed site clearance and built the premises for 70 per cent of the planned area, bringing the total area of industrial land for lease in the north to about 9,900ha.

Apart from this, the market began to recognise the trend of high-rise factories, with a new 7-storey factory with a total floor area of 15,000sq.m just starting construction in the high-tech land of VSIP Bac Ninh.

The ready-built factory market received new supply in Nam Dinh Vu IP, Haiphong, helping to bring the total supply of this segment to 2.1 million sq.m of floor space.