Positive indications, mergers and acquisitions of companies, and a surge in new industrial land have all contributed to the growth of Vietnam’s industrial real estate market. The economic benefits of concentrated regions have allowed industrial manufacturing activities to take place in industrial parks.
If you’re thinking about renting a factory in Vietnam, check out our following article on why factory rent in Vietnam is gaining the market’s attention.
Factory Rent in Vietnam has grown unstable due to Trends in the Industrial Real Estate Sector
The fourth wave of the pandemic had a major effect on the socio economic situation in the third quarter of 2021, when Vietnam’s GDP fell by 6.17 percent. Many manufacturing and commercial operations were stopped due to social distance to combat the pandemic, resulting in the industrial real estate market’s gloom in the South.
As more domestic enterprises are established, the demand for manufacturing and business process facilities increases. Preferential policies have been promoted to entice foreign companies to invest in the Vietnamese market. This further increased demand for factory rent in Vietnam, resulting in price volatility.
The majority of businesses require factory rent in Vietnam in attractive locations, densely populated areas, with convenient transportation and competitive prices. Numerous factory rental service businesses have emerged, offering the highest quality products and services while maintaining prestige and meeting customer requirements.
The industrial parks in Bac Ninh and Bac Giang had to suspend production due to the epidemic that has restrained the increase in industrial land prices. The ready-built factories’ rent recorded an increase at a slower rate compared to the previous quarter, 4.7% compared to the same period last year.
In the south, the ready-built factory rents averaged $4.50/m2/month for the whole region and only increased by 0.5% y/y due to the outbreak of the pandemic.
Warehouse for Lease in Vietnam
As a result of the country’s continued industrialization and the shrinking land area in some areas, the price is high and the factory rental service has increased. Additionally, industrialized countries with factories in Vietnam, such as Korea, Japan, and China, actively promote FDI investment funds in the country’s provinces and cities to increase the attractiveness of the real estate industry.
The economic advantage has enabled industrial production activities in industrial parks throughout the country to continue growing in response to market demands and preferences. Companies and organizations specializing in factory leasing have emerged, offering the best services to the market, and demand for factory rentals has also increased in recent years.
Factors that make factory rent in Vietnam appealing to international investors
Renting the right factory rent in Vietnam to serve production and business activities is a vital need of today’s businesses. However, renting a suitable factory plays an even more important role because it brings several great benefits to the operation and development. The following are some of the advantages of renting the right factory in Vietnam.
- Location Benefits
Vietnam is a desirable location because of its human resource advantages, varied free trade agreements, and government pledges to infrastructure development. If the epidemic is quickly contained, Vietnam will profit from improvements in the global supply chain.
The trend in the North is that investors are supporting the development of a complex industrial real estate model, with the Korean LH Group usually stating their willingness to invest in industrial, urban, and service projects. The IDICO business is anticipated to invest in the Vinh Quang urban service industrial park with an area of 495ha in Hai Phong, with a size of 304ha and a total investment of approximately 500 million USD.
In the South, due to the effect of the epidemic, the market recorded a number of manufacturing companies that had to transfer orders from Vietnam to react to the situation in the third quarter of 2021, in addition to the number of newly registered FDI projects exhibiting a declining trend. However, the order movement is just transitory, and no FDI firms have yet to leave Vietnam.
- Full Legal Support Benefits
There will be full legal support so the business can operate and take responsibility for arising problems. The contract is a vital factor that businesses need to pay attention to when renting a factory. It will ensure the interests of both parties, the terms and regulations built into the contract based on the provisions of the law.
You need the help of a dedicated team of professionals that specializes in industrial real estate that can help to analyze and help you get a better understanding of all legal procedures and consider various options before deciding to invest.
- Market Value of Factory Rent in Vietnam
The cost of renting a factory in Vietnam is often the first consideration for clients looking to rent a factory. The cost of renting a factory influenced by several factors, including geography, the state of the factory, its investment possibilities, and the surrounding environment.
According to the latest report on the southern industrial real estate market in the second quarter of 2021, the total area of average price peaked in the industrial land rental segment, reaching $113/m2/lease cycle, up 7.1% over the same period last year.
Hanoi and Ho Chi Minh City are two of the major cities in the world with the most affordable industrial real estate. The rental rate in Hanoi exceeds five dollars per foot. Rent in HCMC is less than ten dollars per square foot (0.092 m2).
A full-service consultation from Savills Industrial can help you refinance your investment needs
Our staff of Savills Industrial specialists and the surrounding area enables us to constantly monitor and follow activities in local, regional, and national markets. Hopefully, the information provided above will be beneficial and assist readers in better comprehending the topic of factory rent in Vietnam.