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Industrial Real Estate - Overview of the industrial real estate market in six months of 2022

The Government considers the socio-economic situation in June and the first six months of 2022 to be lucrative in most areas, with remarkable growth and several indicators approaching or exceeding targets. The industrial real estate market is no exception to this trend, with several positive signs reported in the first half of 2022. The following are some noteworthy facts concerning the industrial real estate market:

The number of industrial park projects increases in the period of 2021-2022 and in the first 6 months of 2022

As of June 2022, the whole country has 563 industrial parks specified in the Development Planning of industrial parks in Vietnam (including industrial parks in coastal economic zones and border gate economic zones) with a total natural land area of about 210.9 thousand hectares. Among the 563 planned industrial parks, 406 industrial parks have been established, including 361 industrial parks located outside the economic zones; 37 industrial parks are located in coastal economic zones, 08 industrial parks are located in border gate economic zones.[1]

In 2021-2022, there are a total of 50 new/expanded industrial parks approved, with a total area of more than 10,142 hectares, of which in the first 6 months of 2022, there are 9 new industrial parks signed for establishment decisions, with a total area of 2,472 hectares, expected to come into operation in the next 2-3 years, significantly increasing the supply of new industrial parks land.

Industrial land rental prices in Southern increased by an average of 9%

• Research by JLL Vietnam shows that, in the first quarter of 2022, in the Southern, the occupancy rate of industrial parks remained at 85% (approximately 86% occupancy rate of the first quarter of 2021) in the context of supply growth.
• In addition, the industrial park land rent in the Southern also increased strongly. The JLL recorded an average rent of USD120/m2/lease cycle, continuing to increase by 9% over the same period in 2021.
• The market of industrial parks in Binh Duong and Long An continues to attract investors. Typically, VSIP 3 industrial park has just started construction, but so far more than 30 corporations and companies are interested in researching and developing production, equivalent to 175 hectares of industrial land (~ 23% of the total VSIP 3 commercial land fund).
• Long An also received Coca Cola's factory investment project worth more than USD 136 million in Phu An Thanh industrial park and BWID's first two ready-built warehouse projects in Xuyen A & Vinh Loc 2 industrial zone.

Despite of the competitive pressure, the market in the Northern still recorded growth

• The occupancy rate of industrial parks in the North this quarter remained at 80%, rapidly increasing compared to 75% in the same period in 2022.
• The average industrial land price reached USD109/m2/lease cycle, down slightly from the previous quarter due to more favorable rental rates in some industrial parks in less convenient locations and the desire to speed up occupancy. However, land rent in general continued to maintain a rapid increase with an increase of 9.2% over the same period in 2021.

Supply of ready-built factories grew rapidly in the first quarter of 2022

The supply of ready-built factories after a period of slowing down due to the epidemic made an impressive comeback in the first quarter of 2022 with a growth of 9.1% compared to the end of 2021. Supply in the first quarter came from newly completed projects in the Southern region, led by Binh Duong and Long An provinces with projects of BWID (joint venture Becamex and Warburg Pincus) and Frasers Property (Singapore).

Source:

Industry Report June 2022 – Mirae Asset Securities (Vietnam)