The Vietnam industrial white paper reported that sudden growth in lease enquiries for land, factory and warehousing has resulted in price escalations in IPs near major cities (Photo: thuongtruong.com.vn ) Hanoi (VNS/VNA) - Vietnam will see strong growth in industrial propertynext year due to higher demand for industrial parks asbusiness expand production or relocate out of China, accordingto Savills Vietnam.
“In the coming years, particularly 2021 and 2022, I think we are going to see abig emphasis on supply,” said John Campbell, Industrial Services, SavillsVietnam.
“This is going to beincreasingly pursued by multinational manufacturers as corporations seek tomitigate risk and diversify locations. Vietnam is on the top of many othersoutside of China and I think this is going to be a big focus for the future.”
In terms of land supply, Dong Nai province is planning eightadditional industrial zones (IZs), including four new IZs in Long Thanhand four other IZs in Phuoc Binh, Tan Hiep and Binh An communes, according tothe Savills’ Vietnam industrial white paper 2020 released in Hanoi last week.
The largest private conglomerate in Vietnam, Vingroup, plans to invest over 400million USD in subsidiary Vinhomes IZ. Its first two projects will be in Hai Phong,the Nam Trang Cat Industrial Park (IP) is expected to open in the secondquarter of 2021 and the Thuy Nguyen IP in the fourth quarter of 2021.
Also in the fourth quarter of 2021, a 238ha IP of the Kinh Bac City HoldingsCompany will bring much needed supply to Bac Ninh province. Over the samequarter, TNI Holdings Vietnam will open the 177ha Song Lo 1 IP in Vinh Phuc province.
In southern-based Long An province, TIZCO JSC and Vietnam Innovation ParksGroup JSC (VNIP) will open the 1,800ha Viet Phat IP in 2021.
The white paper reported that ready-builds remain under high demand withsuppliers reluctant to make long-term land lease commitments or rely on shortterm contracts. This has resulted in rental developers racing to secure landfor expansion.
BW Industrial Development JSC (BWID)’s 10 sites with a total area of over 500haacross eight key cities continue their expansion as Vietnam’s biggestindustrial developer of ready-built factories, warehousing and built-to-suitsolutions.
Global logistics and warehouse developers have entered despite the ongoingCOVID-19 pandemic. Logos Property from Australia has entered with a 350 millionUSD logistics development joint venture.
GLP, the largest warehouse developer in Asia, is planning a 1.5 billion USDventure with Vietnam’s SEA Logistics Partners (SLP). Republic of Koreanfirm Mirae Asset Daewoo Co and Naver Corporation have jointly invested 37million USD into warehousing in the LogisValley logistics hub in Bac Ninh province.
At present, Matthew Powell, Director of Savills Hanoi, said there had beenmajority of industrial real estate provided by Vietnamese developers andVietnamese investors.
“Over last 20 years, there has been really good quality of industrial realestate. This is supplemented by foreign specialists and developers in the last10 years and so much more interest in the last 2- 3 years, and manypartnerships as well.”
“Now we see the improvement of quality of offers, quality of real estate and achange towards more sophistication in the industry, not just the low valuelike garments or footwear, and up to the high-tech sector which requires morespecialised real estate."
"In the future, we will see the development of data centres with largerequirements and power supply and connectivity as well. It has been anevolution.”
The Vietnam Government has provided a lot of incentives in different economiczones across the country. The policies are attractive, the country is attractiveto investors geographically, with the labour population, land costs, labourcosts, and operation costs, according to Powell.
“What the Government can do is to plan for the future to keep rapidly movingahead in the infrastructure changes to make sure that Vietnam exceeds theaverage in Asia, not just catching up to Indonesia, Thailand and otherSoutheast Asia countries,” said Powell.
"It is not just about behind the average, it should be above the averageand that will receive more investors coming to Vietnam and of course, thingscan always be improved in market entry, policies, competitiveness and theeducation sector to provide more people to work in this sector. Vietnam has ademographic that support the population and that is what companies are lookingfor.”
John Campbell, Industrial Services, Savills Vietnam, said with regards to theEVFTA, there was certainly a lot of visible advantages already happening.
"We see a lot of industrial parks ready for foreign investments. ForVietnam, to make sure it is ready in the future, the biggest key thing is thesupply of skilled labour," said Campbell.
With the EVFTA, the types of countries and industries looking at Vietnamare different now. A lot of industries are higher value which are high tech orsupporting high-tech and new renewable energy, according to Campbell.
Vietnam needs to make sure that it has a proper supply of skilled labour notjust in Hanoi, HCM City or Dong Nai but also in some provinces in order toattract more projects.
Regionally, Vietnam has a lot of competitive advantages over its Asiancounterparts. Traditionally, there have always been competitive labourcosts but in recent years, Vietnam has more advantages such as proactivity andmultiple free trade agreements like the EVFTA and CPTPP. Moreover, Vietnamhas political stability, improved business climate and a very youngdynamic working population.
He also said that: "Certainly, in some locations or some provinces, therising land lease prices can affect the occupancy. However, it depends on theinvestors, what we know is that there are a lot of high value investors infields like electronics and high-tech and they are concernedabout the land lease price for low value added industries like furniture. Vietnamis trying to attract more high value added sectors at the moment."
"One other factor to consider is we see more industrial parksand land supply coming to the market, like the future 561industrial zones. Till then, it is interesting to see how that supply helps thelaw and land lease prices. But for now, in the key provinces, there is anoccupancy rate which means that the remaining land is going to be priced quitehighly."
According to the Vietnam industrial white paper, sudden growth in leaseenquiries for land, factory and warehousing has resulted in price escalations inIPs near major cities.
In the south, IP lease price in 2020 reached between 65 USD and 147 USD persq.m in HCM City, Binh Duong, Dong Nai, Long An and Ba Ria-Vung Tau.
In the north, prices were between 76 USD and 129 USD per sq.m in Hanoi, BacNinh, Hung Yen, Hai Duong and Hai Phong./.
VNA
