Real Estate in Industrial Parks: Many Different Developments

 

Hanoi currently has about 9 IPs with a total leasable area of approximately 1,400 hectares. In particular, the total land area available for rent in the fourth quarter of 2013 quarter accounted for 34 percent, unchanged from the third quarter of 2013.

 

Six of the nine IPs have been fully filled. Three parks still have land available for lease including Hoa Lac Hi-Tech Park, Phu Nghia IP and Noi Bai IP (Phase 2). Hoa Lac Hi-Tech Park still has the highest rate of vacant land in active industrial parks in Hanoi with approximately 441hectares of land available for rent.

 

Cushman & Wakefield also said that rent price in Hanoi’s industrial parks in the fourth quarter remained at about VND2.25 million a square kilometre per lease term (equivalent to over US$107 a square kilometre in the whole lease period), excluding VAT. Management fees in those industrial parks ranged from US$0.4 to 1 a square kilometre per month. However, average rents in Hanoi’s industrial parks in remains the most expensive compared to those of other provinces and neighbouring areas of northern Vietnam.

 

So far, Hanoi’s IPs have attracted 545 projects with the total registered capital of up to US$4.62 billion. By 2030, Hanoi will have had 33 industrial parks with an area of ​​about 8,000 hectares, attracting investment in supporting industries, high -tech and environmentally friendly industries. In the first quarter of 2014, HANSSIP industrial park phase 1 is expected to go into operation.

 

Ho Chi Minh City currently has 18 active IPs with the total area of ​​more than 3,600 hectares, in which leased areas account for 62 percent of the total land area, reaching more than 2,200 hectares.

 

The land expiry date of the industrial parks remains around 28-45 years, averagely 37 years remaining. Most industrial parks locate in the suburbs and are mainly concentrated in the districts of the west. Cu Chi and Hoc Mon are considered two emerging districts for IP projects because vacant land area is relatively large.

 

Average rent price reached VND2,568,000 a square metre per lease term (US$122 per metre in the whole rent period), down nearly 2 percent from the last quarter and 4 percent over the same period last year. This rent rate is twice as high as that in Long An, Binh Duong and Dong Nai.

 

Most of the industrial parks in Ho Chi Minh City have occupancy rates of over 90 percent over many years of establishment and operation. However, a number of industrial parks in Binh Chanh and Cu Chi have recently been put into operation, thus occupation rate remains low of below 50 percent, making the average rate for the whole rental market about 73 percent, no change compared to the previous quarter but increasing by one percent compared to the same period last year.

 

Currently, investors tend to move from long -term lease of industrial land to constructing factories for rent with the area of ​​2,000 – 3,000 meters. The issue which should be concerned about is supporting policies from related agencies to attract investment.

 

From now to 2020, the total supply is estimated to increase to about 3,000 hectares, an increase of 85 percent compared with the current supply. Regarding the number of IPs, there will be about 30 new IPs and extended industrial parks going into operation, up 12 compared with the supply at the fourth quarter of 2013.

According to the report by Cushman & Wakefield, quiet leasing operation is expected to continue in the coming years, which will put pressure on rent price.