Industrial real estate, especially the ready-built factory segment, is reported by experts to continue to have strong growth in both supply and rental prices in 2024.
According to the Vietnam Real Estate Association, although the real estate market in 2023 is still difficult, industrial real estate has not cooled down, demand is always many times higher than supply and Vietnam is the destination of the wave of movement of international businesses, especially after moves to strengthen cooperation with the world’s leading economies such as the United States, Japan, China,…
Information from market research unit CBRE Vietnam shows that in 2023, tenants from China, Japan, the US and the European Union account for about 70-80% of searches and inquiries for industrial land and warehouses in both the South and the North.
According to CBRE Vietnam, investment flows come from major partner countries such as the US, South Korea, Japan, China,… will continue to lead the demand for domestic industrial real estate market.
“Vietnam’s industrial real estate market will continue to record changes with expectations of growth in FDI capital as well as the diversity of industries of FDI enterprises, especially in the direction of high technology content. Along with that, more and more businesses and tenants put sustainable development goals into the criteria for selecting factory development locations and renting warehouses. This is a factor promoting the development of new supply of green buildings in the future,” said Ms. Nguyen Hoai An – Senior Director of CBRE Vietnam.
Industrial real estate, especially ready-built factories, is forecast to continue to grow positively in 2024.
Occupancy rates and rising rents
Along with the “scarcity” when demand increases, over the past time, industrial real estate has also witnessed positive growth in both occupancy rates and rental prices.
Data from Yuanta Vietnam Securities Company shows that, for northern industrial parks, the occupancy rate of leased land by the end of September 2023 will reach 80.2%.
Rental prices in Q3/2023 are common from 120 – 150 USD/m2/rental cycle, the average is 131 USD/m2/rental cycle, up 12% over the same period last year.
In particular, the highest rent is in Hanoi, where the supply of industrial parks is not much. Bac Ninh and Hai Phong are the two provinces with the largest industrial park supply and high occupancy rate.
In the south, Binh Duong and Dong Nai are the two provinces with the largest supply of industrial parks, with an average occupancy rate of 91%, by the end of September 2023. Meanwhile, Ba Ria – Vung Tau and Long An are two new potential areas for the industrial park segment, the occupancy rate of leased land is at more than 80%, but the supply of land is limited.
The average rental cost in southern IPs in Q3 was US$189/m2/rental cycle, up 13% over the same period in 2022. In particular, TP. HCMC has the highest rental price, Long An is a potential new area thanks to its proximity to Ho Chi Minh City. HCM.
Meanwhile, according to CBRE Vietnam’s forecast, in the next 2 years, industrial land rental prices are expected to increase from 6-10% / year in the North and 4-8% / year in the South. In particular, the rental price of ready-built warehouses is forecasted to increase slightly by 2-4% / year due to new projects with good specifications and convenient locations, making the rental price higher than the market average.
Supply Outlook
As one of the segments going against the general decline trend of the real estate market, over the past time, many businesses, especially FDI enterprises, are continuing to promote investment in industrial real estate, especially specialized types such as ready-built factories, cold storage, data,…
According to Ms. Trang Le – General Director of Cushman & Wakefield Vietnam, in 2024, the modern ready-built warehouse segment can receive significant new supply with high-quality projects in Bac Ninh, Hai Phong, Hung Yen.
According to forecasts, the supply will increase by about 700,000m2, bringing the total supply of modern ready-built warehouses by the end of 2024 to increase by 1.6 times compared to the current time. In addition, in the short term, this segment in the North is expected to continue to expand throughout neighboring provinces (Vinh Phuc, Bac Giang, Quang Ninh) thanks to the advantage of competitive land prices and available land sources for new project development.
