Logo of Phnom Penh Post newspaper Phnom Penh Post - Vietnamese industrial property sector optimistic



Vietnamese industrial property sector optimistic

Content image - Phnom Penh Post
In 2022 and 2023, the industrial land supply in Vietnam is expected to increase by over 7,000ha for both Northern and Southern regions. VIETNAM NEWS AGENCY

Vietnamese industrial property sector optimistic

Vietnam's industrial real estate sector is considered a bright spot this year, and property businesses with industrial parks are expected to benefit from increased demand and rental prices.

According to SSI Securities Inc, public investment in improving the infrastructure connecting industrial parks is promoting recovery of demand of rented land in the industrial parks.

Infrastructure projects that will create convenient traffic connecting industrial parks include the expressway projects of Bien Hoa-Vung Tau, Dau Giay-Phan Thiet, North-South, Thi Vai-Cai Mep port and Gemalink port.

Cushman and Wakefield, a leading global real estate services firm, reported that Vietnam continues to be an attractive destination for industrial real estate investors due to a stable growth rate, an export-oriented economy, an increase in free trade agreements, a young workforce, preferential investment policies and strategic location.

With favourable government incentives, competitive labour costs, a stable political environment, a positive economic outlook and free trade agreements, Vietnam has also become favoured by foreign investors moving out of China.

To seize this opportunity, in early 2022, information about the expansion of the land fund has been announced by listed companies.

IDICO Corp JSC (IDC) has targetted to complete the entire site clearance at the Huu Thanh Industrial Park in Long An province this year. The industrial park has completed site clearance of over 91 per cent of the total area with 150ha ready for lease.

In addition, high land rent in industrial parks will also aid the growth of industrial park real estate enterprises in the future.

Sonadezi Chau Duc Shareholding Co witnessed a sharp increase in net profit in the fourth quarter of 2021 thanks to the impressive increase in rental land area and rents.

Its revenue increased by 108.9 per cent year-on-year to 147.7 billion dong ($6.5 million), mostly from industrial park land rental. Its gross profit margin increased by 24.1 percentage points to 64 per cent thanks to a 10-15 per cent surge in land rent in the Chau Duc Industrial Park. As a result, the fourth quarter’s net profit jumped 186.7 per cent year-on-year to 68.1 billion dong.

With an increase of five per cent per year in the basic land prices applied in Binh Duong this year, more enterprises expect positive business performance.

According to SSI, the Investment and Industrial Development Corp can achieve a profit growth rate at higher than 43 per cent from 2022 because it owns a commercial land area of 648ha in Binh Duong new city and residential areas in Bau Bang and My Phuoc.

In addition, the company also owns 590ha of available space for lease in industrial parks, reports Vietnam News Agency.

Meanwhile, Investment and Industrial Development Corp large joint ventures such as VSIP (it holds 49 per cent) and Warburg Pincus (it holds 30 per cent) are forecast to have growth in profits due to recovery in demand for leasing land and facilities from this year.

The SSI reported that in 2021, the stock value of the listed industrial park real estate companies increased by 62 per cent, especially the companies with small and medium capitalisation.

In 2021, the Vietnam industrial market was challenged by two waves of Covid-19 in key industrial regions in both the Northern and Southern regions. The supply chain was temporarily disrupted in the third quarter due to various Covid-19 prevention measures.

The government has provided strong support helping the industrial market to maintain overall positive performance and recover quickly when the Covid-19 prevention measures loosened in the fourth quarter of 2021, according to CBRE Vietnam.

In the fourth quarter, average occupancy rates of existing industrial parks in five key Northern industrial cities and provinces (Hanoi, Bac Ninh, Hung Yen, Hai Duong and Hai Phong) reached 79.3 per cent, up by 3.6 percentage points year-on-year. Similarly, the occupancy rate of four key Southern industrial cities and provinces reached 87.3 per cent, up by 0.11 percentage points year-on-year.

Regarding the transactions recorded by CBRE in 2021, the sizes of land lease transactions ranged between 3ha and 40ha, with land sizes commonly ranging between 3ha and 5ha. Big transactions with land sizes of 20-40ha were recorded from tenants in the logistics, electronics, and toy manufacturing industries.

In terms of industry, logistics and electronics were active with various transactions in both the Northern and Southern regions of Vietnam.

In addition, packaging and solar energy industries in the North, as well as furniture and medical equipment in the South were emerging with an increasing number of deals done.

Due to improving occupancy rates, average asking rents were stable in major industrial cities and provinces despite Covid-19. Industrial parks within a one-hour travelling radius from Ho Chi Minh City and Hanoi increased asking rents by 15-32 per cent.

With solid leasing demand resulting from the shifting supply chain and the infrastructure improvement (Trung Luong-My Thuan, Dau Giay-Phan Thiet in the South; Van Don-Mong Cai expressway, Ninh Binh-Hai Phong in the North), the industrial market recorded expansion and entrance of new developers.

Foreign developers expanded their portfolios by acquiring land and assets, a joint venture with local developers. On the other hand, strong local developers can negotiate and acquire land directly from the government.

Performance of warehouses and ready-built factories remained stable. In the new warehouse and ready-built factory hubs, asking rents increased by five-to-17 per cent, primarily due to better specifications.

In 2022 and 2023, industrial land supply is expected to increase by over 7,000ha for both Northern and Southern regions.

Average asking rents are anticipated to achieve an annual growth rate of four per cent in both regions due to stronger supply.

VIET NAM NEWS/ASIA NEWS NETWORK

MOST VIEWED

  • Angkor lifetime pass, special Siem Reap travel offers planned

    The Ministry of Tourism plans to introduce a convenient, single lifetime pass for foreign travellers to visit Angkor Archaeological Park and potentially other areas. The move is designed to stimulate tourism to the culturally rich province of Siem Reap as the start of the “Visit

  • Bosba: The first Khmer woman composer from UK’s Cambridge

    Bosba Panh is just 25 years old, but she’s already accomplished some impressive milestones for herself and the Kingdom. On July 24, she graduated with a Master’s degree from the University of Cambridge as the first Khmer woman composer and Khmer music graduate ever at

  • ‘Golden’ Angkor Wat likely due to natural phenomenon: ANA

    Pictures and video clips of the Angkor Wat temple, its spires seemingly coated in gold, have been shared tens of thousands of times on social media, prompting a sense of wonder among those who have seen them. Hong Sam Ath, who took the pictures and

  • Pailin longan winery tries to break through to the big time

    Longan aren’t quite as glamorous as some fruits. They don’t have the star-power of mangos or generate the excitement of a pricey seasonal niche fruit like the pungent durian. Unlike bananas or oranges, which are known and loved everywhere, longan remains a decidedly

  • Debt restructuring over, time to tackle rising NPL ratio

    The Cambodian banking system has just completed a 26-month debt restructuring exercise where scores of loan accounts were revised, classified and provisioned as the rate of non-performing loans inched up, sparking a slight credit risk unease Implemented in April 2020, the Covid-19 debt restructuring measures came

  • Koh Slaket studio resort brings culture with style

    Davitra (Cambodia) Co Ltd’s multi-million-dollar 13ha Koh Slaket studio-cum-resort just east of the capital was inaugurated in the first phase on August 6, providing national and international tourists with a new travel option and job opportunities for locals. The man-made cultural and scenic lakefront getaway