Industrial Real Estate Maintains Its Leading Position, Promising Growth in 2024

DNHN - Notwithstanding the economic downturn, the industrial real estate market is still expanding. As a result, rental prices have continued to rise well due to the favourable FDI capital flow and the benefit of prioritised tax policies.

According to statistics, there are currently 412 Industrial Parks (IPs) established nationwide (368 IPs outside of SEZs, 37 IPs in coastal SEZs, and 7 IPs in border-gate SEZs) with a total area of 217.5 thousand hectares.

Specifically, 293 IPs have been put into operation with a total natural land area of approximately 92.2 thousand hectares, and an industrial land area of approximately 63 thousand hectares. Of these, 119 IPs are under construction with a total natural land area of approximately 37.5 thousand hectares, and an industrial land area of approximately 24.7 thousand hectares.

Regarding occupancy rates and rental prices, they continue to grow despite economic challenges. A slight decrease in occupancy rates only occurred locally in a few provinces that recorded many newly available supplies.

The occupancy rate of IPs in operation is over 70%. Of which, the key provinces in the North reach 80% and the key provinces in the South reach 90%. Rental prices increased by about 20% compared to the previous period, with the Northern region witnessing the strongest price increase.

In the North, the average rental price is 135 USD/m2/rental cycle, an increase of 33% compared to 2022. Bac Ninh recorded the largest price increase, up 40% to 160 USD/m2/rental cycle due to the addition of new quality supply and the interest of high-tech enterprises. Hai Phong increased by 30% to 125 USD/m2/rental cycle.

In the Southern market, the average rental price is 188 USD/m2/rental cycle, an increase of 15% compared to 2022. Rental prices are high, higher than in other countries in the region; risks related to the global minimum tax law, along with institutional, policy “bottlenecks”, and practical issues may be obstacles, reducing the competitive advantage in attracting investors to Vietnam. However, Vietnam still has many driving forces to help the industrial real estate market promise to flourish in 2024.

FDI capital flow remains positive with the advantage of preferential tax policies. Transport infrastructure is increasingly synchronous and modern with a commitment to infrastructure investment among the top in the region. IP ancillary services are increasingly being improved.

Many new IP investment projects have been approved in principle and have begun implementing the next phases. The supply of Industrial real estate is witnessing growth in both the North and the South.

The demand for industrial real estate is still very large, especially the demand for multi-purpose multi-storey warehouses and ready-built factories.

According to experts, demand is being boosted in both quality and quantity with a series of investment plans and agreements from foreign enterprises, choosing Vietnam as a destination in the supply chain transformation trend and the expectation of increased cooperation from active diplomatic activities, especially the recently established new Vietnam - US strategic relationship.

The planning of many provinces/cities for the period 2021-2030 has been approved, which will partly resolve the problems related to legal procedures for IPs.

The Vietnam Real Estate Brokers Association stated that the Ho Chi Minh City and Binh Duong markets did not record any price fluctuations because the existing IPs have all been filled with long-term rental cycles. Long An has an average rental price increase of about 12%, ranging from 140 - 300 USD/m2/rental cycle. The average rental price in Dong Nai increased by 20% year-on-year, ranging from 120-240 USD/m2, while in Ba Ria-Vung Tau, the average rental price was 130 USD/m2/rental cycle, an increase of 30% year-on-year.

According to the Vietnam Real Estate Brokers Association, IPs and SEZs have attracted over 10,400 domestic investment projects and over 11,200 valid FDI projects, with a total registered investment capital of over 2.54 million billion VND and 231 billion USD, respectively. FDI capital in IPs and SEZs accounts for about 35 - 40% of the total newly registered FDI capital of the whole country in recent years.

The proportion of investment capital realized in IPs and SEZs in the total social investment capital is approximately 30%. Promoting local infrastructure and economy. Creating the premise for the development of many supporting industries, creating opportunities for the development of residential real estate, and rental housing.

Although it has been significantly affected by the economic downturn and political fluctuations in the world. However, with the great efforts and determination of the State management agencies, the provinces and cities have taken the initiative to orientate priority industries and trades, in line with the development advantages of the locality. Arranging land funds in the planning and at the same time studying and issuing investment attraction mechanisms and open-door policies, inviting investment, investment and business activities in IPs continue to be stable and develop, and the situation of attracting investment and developing IPs continues to achieve many positive results.

Nghe Nhan