According to statistics, Vietnam has 406 industrial zones (IZs), including 37 located inside and 361 IZs located outside economic zones, with eight located inside border gate economic zones.
In the six key northern provinces of Hanoi, Vinh Phuc, Bac Ninh, Hai Phong, Bac Giang, Hung Yen, the toal area of IZs is estimated at 11,000 hectares. The occupancy rate is about 83% and there is only about 2,000 hectares left. The occupancy rate of industrial zones in Hanoi, Bac Ninh and Bac Giang is up to 96% while it is about 77% for Hung Yen and 68% for Hai Phong.
For pre-built factories and warehouses, the average rental price is up to 5 USD/m2/lease cycle and the occupancy rate is 78%.
In the southern region, industrial zones in Ho Chi Minh City, Binh Duong and Dong Nai have very little vacant space. It is said that Long An and Ba Ria – Vung Tau will be alternative investment destinations thanks to good supply. Many factories will be built there in the near future thanks to their convenient locations of being near major ports.
The occupancy rate of IZs in the 6 key southern provinces of HCM City, Dong Nai, Binh Duong, Ba Ria-Vung Tau, Tay Ninh, Binh Phuoc, Long An and Tien Giang is up to 84%, with an average rent of 152 USD/m2/50-year lease term.
For ready-built establishments, rent in the first 8 months of the year averaged $6/m2/month, with an occupancy rate of 88%. Ho Chi Minh City had the highest rental rates, followed by Binh Duong, Long An and Dong Nai.
Many prefabricated industrial park projects have been developed in the southern region by large investors such as BWID, KTG, Industrial Park or Alibaba.
Prospects
The Vietnamese government’s tax incentives for high-tech companies is the driving force behind Intel and Jabu’s investment in the Vietnamese market. These incentives also apply to investment projects in smart agriculture, sustainable and environmentally friendly initiatives.
The Vietnamese government is also making efforts to improve the implementation of investment promotion procedures, thereby making it easier for investors to develop new IZ projects.
In Southeast Asia, there is no other country joining as many FTAs as Vietnam. This helps build trust among high-value manufacturers globally.
Vietnam has a young and dynamic workforce, a growing middle class with higher incomes. Compared to China, Vietnam also has a more stable and favorable government for US and EU companies.
Looking at the development of industrial real estate, compared to other markets in Asia and Southeast Asia, profitability and yield in Vietnam are among the most attractive to investors.
Mr. John Campbell, Deputy Director, Head of Industrial Services Department of Savills Vietnam assessed, for the industrial park in operation, the last 6 deals have been carried out with a profit of 8 -11%, which shows that investment in industrial zones is bringing in quite good profits.
However, there are some barriers for industrial real estate. Firstly, compensation costs and land prices have increased highly, which is a challenge for investors who want to establish new IPs or convert agricultural land into industrial use. Two long-term challenges include labor proficiency and infrastructure.
To attract investors, the Government must also ensure that the quality and quantity of skilled labor is not too disparate compared to other markets in the region.
In terms of infrastructure, the South is in dire need of improving transport networks, especially roads. Although the authorities spend a lot of money on infrastructure investment, it is still limited compared to some neighboring countries.
In the context that many industrial zones around the world are moving to a more economic and environmentally friendly model, it is only a matter of time for Vietnam to go on this path.
Source: Vietnamnet
