Rental rates for industrial land expected to inch higher

Saturday, May 04, 2024 08:34

An industrial zone in Hải Phòng City. The rental cost of industrial zones in Việt Nam is forecasted to increase in the coming years. — VNA/VNS Photo

Rental rates for industrial land in Việt Nam are forecast to slightly increase in the coming time, experts said.

According to CBRE, the surge in the next three years will be 3-9 per cent per year in the North and 3-7 per cent per year in the South.

Meanwhile, the company said, the asking rent of ready-built factories and warehouses is predicted to slightly increase by 1-4 per cent per year in the next three years.

The company attributed price increases to the wider co-operation between Việt Nam and other economies.

As Việt Nam has enhanced its diplomatic relations with major economies recently, it is expected that the country's economy in general, and its manufacturing and industrial real estate sectors in particular, will benefit and continue to develop, the company said.

An Nguyen, senior director, head of CBRE Vietnam branch in Hà Nội, said: "To maintain its position as a destination for foreign investment in the region, Việt Nam needs to continue focusing on improving infrastructure, including road connectivity, the power grid, and industrial zones. It also needs to enhance the quality of its workforce and adjust relevant incentive policies accordingly.”

Việt Nam's industrial real estate market maintained positive activities during the first quarter of 2024.

Manufacturing activities also showed promising signs in the first three months of the year, with exports and imports registering growth rates of 17 per cent and 13.9 per cent year-on-year, respectively. The processed and manufactured industrial goods sector accounted for 88.1 per cent of total export turnover.

For the industrial land market, industrial land rental rates in tier 1 markets of the northern region experienced a slight increase of 1.2 per cent quarter-on-quarter and 7.8 per cent year-on-year, averaging US$133 per sq.m.

Meanwhile, industrial land rental rates in tier 1 markets of the southern region remained stable at $189 per sq.m, showing year-on-year growth of 2.4 per cent.

Due to the absence of new industrial parks entering operation during the quarter and the continuous attraction of new tenants to existing industrial parks in tier 1 markets of the northern region, the occupancy rate increased by 1.3 percentage point to 83 per cent.

The absorption area during the quarter reached nearly 110 hectares, with notable transactions such as the 10-hectare Victory Giant Technology factory in Bắc Ninh Province.

However, in the southern market, due to relatively limited industrial land availability, the occupancy rate remained stable at 92 per cent with an absorption area of just over 20 hectares.

Domestic and foreign manufacturers have tended to expand to tier 2 markets such as Bà Rịa-Vũng Tàu and Tây Ninh, where industrial land supply is relatively abundant and rental prices are more competitive compared to tier 1 markets.

In the ready-built warehouse and factory markets, several large-scale projects continued to launch in the northern region during the first quarter of 2024, mainly concentrated in the Bắc Ninh market.

With the introduction of new supply, the average occupancy rate in tier 1 markets of the northern region reached 70 per cent for ready-built warehouses, a decrease of 6 percentage points quarter-on-quarter, and 87 per cent for ready-built factories, unchanged from the previous quarter.

The average rental price for ready-built warehouses and factories in tier 1 markets reached $4.7 and $4.9 per sq.m per month, respectively. In terms of demand, positive developments in the market came from high-tech manufacturers, such as semiconductor production and motor technology, who continued to expand in Việt Nam by leasing production facilities, such as VDL (Netherlands) and Tecnotion (Netherlands).

According to CBRE, after a period of strong growth, the southern ready-built warehouse and factory markets did not see any new supply in the reviewed quarter.

New projects are still in the construction and completion phase. However, the absence of new supply has had a positive impact on the operations of existing projects.

In terms of average rental rates, the rental prices for ready-built warehouses and factories in the southern market remained stable compared to the previous quarter, reaching $4.6 and $4.9 per sq.m per month, with a year-on-year growth rate of 2.2 per cent for ready-built warehouses and 3.9 per cent for ready-built factories.

Similar to the northern market, the demand for ready-built warehouses and factories in the southern region comes from high-tech manufacturers and renewable energy, as well as the expansion of e-commerce companies such as JiaWei (Taiwan) and Shopee (Singapore), CBRE said. — VNS

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