Industrial properties continue to be a "bright spot" in Vietnam's real estate sector, with mounting rental enquiries and increased capital market activity.
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Industrial properties continue to be a “bright spot” in Vietnam’s real estate sector, with mounting rental enquiries and increased capital market activity.
2021 is forecast to be another bumper year for the sub-sector, with Vietnam continuing to scoop up global manufacturing relocations, and industrial developers with large land banks are looking forward to an even brighter future, according to the latest report from real estate consultants Savills Vietnam.
The report stated that average occupancy rates have increased significantly since 2018. In the north, average occupancies last year were up to 90 percent in Hanoi, 95 percent in Bac Ninh, 89 percent in Hung Yen, and 73 percent in Hai Phong. The rate in Ho Chi Minh City was 88 percent, Binh Duong 99 percent, Dong Nai 94 percent, Long An 84 percent, and Ba Ria-Vung Tau 79 percent.
Vietnam now has about 260 operational IPs and 75 others under construction. The national occupancy rate averages over 70 percent.
The sudden increase in rental enquires for land, ready-built factories, and warehousing has been accompanied by price escalations in IPs near major cities. In the north, prices in Hanoi of 129 USD per sq m were up 13.1 percent year-on-year, of 95 USD in Bac Ninh were up 9.2 percent, of 83 USD in Hung Yen were up 6.4 percent, and of 96 USD in Hai Phong were up 3.2 percent.
In 2020, HCM City saw rental prices of 147 USD per sq m, while in other southern industrial areas, the price in Binh Duong of 107 USD per sq m was up 4.9 percent year-on-year, of 98 USD in Dong Nai was up 6.5 percent, and of 65 USD in Ba Ria-Vung Tau was up 18.1 percent.
Rising demand for industrial properties gave a major push to overall performance by developers. The Kinh Bac City Development Holding Corp (KBC) reported revenue in excess of 2 trillion VND (87 million USD) in the first quarter of 2021, almost quadrupling the figure in the same period last year. Of this, over 1.9 trillion VND came from land rentals and property transfers, a three-fold increase year-on-year.
The Sonadezi Corporation’s revenue rose 14 percent from January-March to over 1.26 trillion VND, with more than 365 billion VND from industrial real estate, Savills said, adding that other developers such as the Tan Tao Group (ITA), the Becamex Infrastructure Development JSC (IJC), and the Nam Tan Uyen JSC (NTC) also saw high growth in profit during the period.
Vietnam has been drawing up plans since last year for the heavy investment being channelled into developing infrastructure and industrial parks to attract more companies in supply chains. Various incentives, including corporate tax exemptions, have been adopted to acquire a competitive advantage over rivals in the region.
(Source: VNA)
