Industrial real estate segment to pick up

Friday, Oct 27, 2023 08:51

Warehouses for lease in an industrial zone in Bình Dương Province. Experts have an optimistic outlook for the industrial realty segment for the rest of the year. — VNA/VNS Photo Hồng Đạt

Experts are increasingly optimistic about the industrial real estate segment as the recovery of manufacturing activities is expected to fuel demand for facility rents in industrial zones.

Real estate agency Savills Vietnam said the rise of industrial production in September was a clear hint of a bullish industrial real estate segment on the horizon.

One hundred and six industrial zones were being constructed to supply the market with 35,700ha of land for factories and warehouses. Meanwhile, in the other 292 up-and-running zones, the occupancy rates had reached over 80 per cent.

Savills Associate Director John Campbell said the industrial real estate segment was changing vigorously with a growing number of investors. To meet their wider range of needs, realty products had expanded to encompass pre-built factories, mixed-use facilities, and temperature-controlled buildings.

The director suggested realty developers go beyond traditional leasing arrangements to offer investors a comprehensive package that can make a significant difference in their operations. The package includes market entry assistance, legal support, and management services.

Trang Lê, Head of Research and Consulting Services, at JLL Vietnam, said a net 86,000sqm of warehouses had been absorbed in the southern provinces, indicating that logistics real estate would be picking up in the last months of 2023 on the back of a recovering domestic demand.

She said 460,000 sqm of new prefabricated warehouses were expected to enter the market in the southern provinces in Q4, raising total available warehouses to 2.3 million sqm, being one and a third times higher than the current level.

Trang Bùi, Country Head of Cushman & Wakefield Vietnam, forecast that the growing demand in the retailing market would significantly intensify the "thirst" for warehouses in the last months of the year.

Meanwhile, supply would be tight in big cities as the occupancy ratios in certain industrial zones had almost reached 100 per cent. In Hanoi and HCM City, the total warehouse supply stood at 2.0 million sqm and 5.1 million sqm, respectively.

In a Cushman & Wakefield report, logistics would be a "money spinner" sector as Việt Nam has become one of the top-choice destinations for global investors. In fact, representatives from big investment companies viewed the country as their first and second top priority among emerging markets in 2022.

Nguyễn Hoài An, Senior Director of CBRE Vietnam, said the industrial real estate segment would continue to pick up steam in the short term, driven by a projected growth in foreign direct investment (FDI) and the diversification of FDI enterprises.

She said investors would become more sustainabilty-conscious when it comes to hiring real estate for factory building. The environmental concern would act as a catalyst for the development of new green facilities in the future. — VNS

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