Supply of Industrial Real Estate Becomes Imperative

9:30:56 AM | 25/8/2020

Although the real estate market in Vietnam is facing many difficulties, the impacts from investment attraction policies and the adoption of the Vietnam - EU Free Trade Agreement (EVFTA) have created confidence for industrial park real estate developers.

According to statistics from the Ministry of Planning and Investment, up to now, the country has 336 industrial parks covering ​​about 97,800 hectares. In which, 261 industrial parks are in operation and the remaining 75 parks are in the process of site clearance or construction phase. The occupancy rate across all operating industrial parks nationwide is 76%.

Since 2018, occupancy rates of industrial parks have increased sharply in the Southern key economic regions such as Binh Duong, Dong Nai, Long An and the Northern key economic regions such as Bac Ninh, Hung Yen, Hai Phong, Thai Nguyen and Bac Giang. Many localities are promoting the expansion of industrial parks.

Mr. Vo Tan Duc, Chairman of the People's Committee of Long Thanh district, Dong Nai province, said that the province has announced plans to build four new industrial parks to meet the rapidly increasing demand of investors.

“The new industrial parks will be built in Phuoc Binh, Tan Hiep and Binh An communes, covering ​​over 900 hectares. In addition, another industrial park is asking for expansion from 130 hectares in 2018 to 500 hectares," Mr. Vo Tan Duc said.

According to experts, with a large number of manufacturers planning to leave China in 2021 and 2022, developers need to build more projects to accommodate these high value production investments. However, the biggest challenge now is to ensure supply of real estate in industrial parks in the near future.

“The main limitation of the market is the supply of industrial parks, so real estate developers need to make efforts to meet the market demand, but this process is slow, so in the coming time the demand for industrial real estate will become more urgent,” Director of Savill Hanoi Matthew Powell said.

According to statistics from the Ministry of Construction, since the beginning of the second quarter of 2020, despite being negatively affected by the Covid-19 pandemic, the industrial property rental price index has still increased by 9% compared to 2019 and is the only segment that has experienced growth given in the worsening pandemic.

The amplitude of rental prices in industrial parks has also increased, the average rental price of the whole country is about US$95/m2/rental cycle of 50 years. But in some provinces, such as Bac Ninh or Vinh Phuc, the average prices are at between US$100 - 120. Some areas in Bac Ninh have average rental price of US$130.

Source: Vietnam Business Forum