As a consequence of Vietnam’s movement from agriculture to industry and services and several favorable market events such as mergers and acquisitions and greater availability of new industrial land, industrial property has emerged as a sector that has piqued the interest of many investors. Overall, the warehouse or factory industrial outlook in Vietnam sees a bright future thanks to both internal and external factors.
The Warehouse or Factory Industrial Outlook in Vietnam
The Big Picture of the Industrial Property in Vietnam
Foreign direct investment (FDI) has reached USD 10.5 billion in the last seven months, a 3.8 percent rise year on year.
The processing and manufacturing industry continues to lead the 18 sectors of the warehouse or factory industrial outlook in Vietnam in which international investors have ventured in Vietnam, accounting for about USD 7.9 billion, or 47.2 percent of total registered investment capital. With a total registered capital of USD 1.16 billion, the real estate industry remains in third place.
In general, GDP expanded by 5.64 percent in the first six months of 2021, above the 1.82 percent growth rate in the first six months of 2020. So far, the industrial sectors have witnessed the most increase.
Thanks to the Free Trade Agreement and trade concerns between the United States and China, Vietnam’s industrial park property investment is becoming a spotlight. This has assisted in the transformation of technology and information, hastening the move from low-value and local sectors to higher and better-value businesses. Furthermore, industrial parks that have been incorporated in key master plans will be a magnet for financial flow in the approaching period.
In addition, together with typical industrial properties, the demand for logistics and storage will give a substantial potential to assist the industrial property growth in the future.
There will still be a lot of large investments from giant corporations in local industrial sites in the short to medium future.
Overview of the Northern Region
The Northeastern area is expected to have a thriving industrial property market. Besides the Red River Delta provinces, provinces in the Northeastern area such as Quang Ninh, Bac Giang, and Thai Nguyen are attracting a lot of attention from investors due to lower rental costs and progressively upgraded infrastructure. Land prices in these places are likely to rise by 8-10% year on year.
Furthermore, with the arrival of many new investors, the region is expected to be home to an exceptionally vibrant ready-built industrial sector.
Despite the effects of the epidemic, the northern region’s occupancy levels remained consistent following the release of a succession of very substantial projects in the fourth and first quarters of 2020 and 2021.
The vacancy rate in industrial sites in the North is now at 75%, although ready-built factories have decreased compared to the previous half of 2021 due to new supply.
Land prices increased 5.9 percent over the same time last year, but declined compared to the first quarter of 2021. Furthermore, ready-built factory rentals have increased at a slower rate than in the same period of 2021.
Overview of the Southern Region
Rental prices will rise more as infrastructure upgrades. So far, Vietnam has been identified as one of the countries that has successfully managed the epidemic. This has been critical in solidifying and increasing investor trust in a promising economic climate like Vietnam.
The warehouse or factory industrial outlook in Vietnam, especially in the Southern area is projected to rise further. Over 940,000 square meters of ready-built manufacturing space will be sold in the fourth quarter of 2021, if the pandemic situation improves and the market recovers.
Land rental prices are rising, but leasing prices for ready-made industries have remained stable. Over the years, industrial land, which is deemed to be in a condition of long-term production investment, has maintained a reasonably constant price rise. Industrial zone owners in the Southern area established a new average price high of $113 per square meter every lease cycle in the second quarter of 2021, a 7.1 percent rise over the same time last year.
Meanwhile, the average monthly leasing price for ready-built industries in the Southern area was around 4.5 USD per square meter. This price, which indicates just a 0.5 percent rise over the same time last year, can be attributed to Pandemic’s effects on this sort of industrial property.
Challenges, Opportunities & Potentials of The Industrial Real Estate Industry in Vietnam
The need for land and factories has increased dramatically in recent years, that’s why Vietnam’s industrial property industry is growing more vibrant and enticing.
The manufacturing and processing industry accounted for 68 percent of the total FDI capital investment poured into Vietnam (USD 31.8 billion).The country’s capacity to attract foreign investment is continually growing as a result of its young workforce, stable political climate, and, most importantly, enormous economic potential.
Moreover, New Free Trade Agreements (FTA) provide numerous opportunities. Vietnam has signed and will sign free trade agreements with the world’s biggest economies. This is a very encouraging indicator for the overall growth of the local economy. The new FTAs will allow Vietnam to participate more in international commerce and learn more about science and technology from industrialized nations. The country is also projected to transition away from low-value exports and toward higher-value exports.
US-China trade tensions have positive effects on the warehouse or factory industrial outlook in Vietnam.
The extended tensions between the United States and China have created a fresh opportunity for the Vietnamese property market. China is about to relocate manufacturing from their home nation to new countries, with Vietnam being one of the prime candidates.
During the US-China trade war, Vietnam has reaped the most benefits in Southeast Asia. Industrial parks in Vietnam have substantially lower leasing prices than their counterparts in China. In particular, leasing costs in Vietnam vary between 100 and 140 USD per square meter every cycle, but prices in China can reach up to 180 USD per square meter per cycle.
Many global corporations that manufacture spare parts, clothes, and electronics, such as Foxcom, Lenovo, Nintendo, Hanwha, and Shuafu, have transferred plants from China to Vietnam. This indicates that these corporations will send a big number of professionals, engineers, and workers to Vietnam. This transfer will benefit all segments, not only the warehouse or factory industrial outlook in Vietnam.
The pandemic, in particular, creates logistical, supply chain, and commercial operations issues in the industrial property market.
During the epidemic, numerous small and medium-sized businesses went insolvent.
Customers are losing interest due to a lack of supply, and investors want to spend their efforts on mitigating pandemic implications rather than taking more risks. Activities in the property industry in general, and in the industrial property segment in particular, have decreased by 60% to 70%. According to statistics, almost half of all property swaps are presently dormant.
Vietnam’s industrial sites are more appealing than the regional average, thanks to advantages such as low labor costs, fair land leasing prices, corporate income tax benefits, and so on.
1. Occupancy rate is high
These stats suggest an average occupancy rate of 75% or above. Furthermore, industrial land resources have been steadily rising as a result of the rapid increase of industrial development. This suggests that industrial assets are just as appealing as other divisions. For the time being, this is a safe part to select.
2. Lease prices experience an uptrend
The warehouse or factory industrial outlook in Vietnam has a comparatively high lease price, around 95 USD per square meter during a 50-year cycle. Prices are significantly higher in areas experiencing rapid expansion. Significant prices unquestionably show high demand. To capitalize on market advantages, investors should maximize their resources.
3. Traditional to modern transformation
Vietnam’s industrial parks are continuously modernizing and becoming more appealing to international investment. One of the most significant developments is the steady transition from the traditional to the updated form, particularly in the Southern industrial parks.
To boost utilization efficiency, they have abandoned the old paradigm in favor of a hybrid of commercial and service districts, high-tech clusters, and modern urban regions.
Furthermore, enhancing the quality of infrastructure and human resources is crucial. In addition, they lease industrial premises such as offices and apartments and provide leisure services.
In addition to this transition, an element that is gaining prominence and will become a trend in the next few years is the green factor. It is critical to maintain the quality of the living environment while merging manufacturing and service, utility, and dwelling sectors in the same project. Despite increased support and marketing, the number of really green property developments remains low, particularly in the industrial property category.
Savills Industrials Provides High Quality Warehouses & Factories for Lease in Vietnam
Reasons why Savills is the best Provider
1. The leading industrial real estate enterprise in Vietnam
After considerable development in the manufacturing and logistics sectors, Savills Vietnam launched a full-service platform for industrial real estate in 2017.
Industry professionals with extensive market knowledge and expertise provide comprehensive manufacturing and logistics real estate consultancy. Our service includes everything from market access through leasing, investment, appraisal, transaction, and disposal.
2. Conduct extensive market research on the warehouse or factory industrial outlook in Vietnam
To get a competitive edge, a thorough grasp of the target audience, rivals, and market is required. Savills Industrial Real Estate Services delivers technical and macro analysis to guarantee that all market components are tracked to ensure that projects have the best chance of success. If you’re considering entering the market for the first time, or expanding or expanding your operations, Savills Industrial Services Department can help.
3. Consulted by industry experts
Savills Industrial has a team of skilled individuals that consult on the warehouse or factory industrial outlook in Vietnam and right industrial properties for each company’s characteristics and nature. Throughout the working process, consumers will receive specialized assistance, answer questions about rental concerns, and handle any problems that arise. Customers will be accompanied by experts till a final choice is reached.
Read more: The Leasing Cold Storage in Southeast Asia is Expected To Grow Significantly
Savills Industrials Provides High Quality Warehouses and Factories for Lease
– Location: Tam Nong, Phu Tho
– Total area: 5.5 ha
– Vacant area: 5.5 ha
– Price: Contact
– Key features:
+ It is situated near the confluence of the Red and Da rivers, close to National Road 32A.
+ With a lease period of 2055, the pricing is competitive.
+ Encouraging management board
+ Fully functional regions
– Location: Thanh Tri District, Ha Noi City
– Total area: 3.75 ha
– Vacant area: 3.75 ha
– Price: Contact
– Key features:
+ Ideal location for numerous industries
+ Convenient accessibilities
+ Developed road system
+ Clear transfer deal structure.
– Location: Lien Chieu, Da Nang City
– Total area: 5,300 m²
– Vacant area: 4,000 m²
– Price: Contact
– Key features:
+ Convenient connection
+ Reliable investors
+ Supportive government policies
+ Attract more high-tech industries
The essay makes a solid case that, in the future, the warehouse or factory industrial outlook in Vietnam demonstrates that the industrial market will become a lucrative investment category and a driving factor in the local economy’s continuous expansion. The government has implemented several new measures to stimulate, assist, and ease the growth of this industry and capitalize on current prospects.
Savills Industrials remained devoted to offering a dependable factory leasing service, ensuring that it met all of the industry’s standards for a reputable factory, such as an operable site, competent staff, and a corporate culture centered on long-term growth. If you are in need of industrial real estate buying, selling and leasing services with the help of experts, contact Mr. John Campbell for more information now!