Logo of Phnom Penh Post newspaper Phnom Penh Post - Vietnam’s industrial property remains attractive: Savills VN

Vietnam’s industrial property remains attractive: Savills VN

Content image - Phnom Penh Post
Ben Cat Industrial Park in the southern Vietnamese province of Binh Duong. The sudden increase in lease enquiries for land, ready built factories and warehousing has been accompanied by price escalations in industrial zones (IZ) near major cities. VIETNAM NEWS AGENCY/VIET NAM NEWS

Vietnam’s industrial property remains attractive: Savills VN

Industrial property continues to be a hot segment for Vietnam’s real estate market with mounting enquiries as manufacturers seek to mitigate risk and diversify supply chains, according to Savills Vietnam.

The sudden increase in lease enquiries for land, ready built factories, and warehousing has been accompanied by price escalations in industrial zones (IZ) near major cities.

Average occupancy levels increasing significantly since 2018, resulting in a growing supply gap and a clear need for additional development in key industrial provinces.

Last year, Binh Duong was almost fully occupied at 99 per cent and Dong Nai moved up to 94 per cent. Average occupancies were 88 per cent in Ho Chi Minh City, 84 per cent in Long An and 79 per cent in Ba Ria-Vung Tau.

In northern areas average occupancies were up to 90 per cent in Hanoi, 95 per cent in Bac Ninh, 89 per cent in Hung Yen, 82 per cent in Hai Duong and 73 per cent in Hai Phong.

Meanwhile, lease prices were up 13.1 per cent year-on-year to $129 per sqm in Hanoi, 3.2 per cent year-on-year to $96 per sqm in Hai Phong, and 9.2 per cent to $95 per sqm in Bac Ninh. This price surged by 6.4 per cent to $83 per sqm in Hung Yen and 15.1 per cent to $76 in Hai Duong.

In Thanh Hoa province, the very competitive land lease cost of $40-$50 per sqm supported, in 2020, significant investment of $349 million in total registered foreign direct investment (FDI), to rank 20th of the 60 provinces for FDI, Savills Vietnam said.

Of which, Foxconn moving into Thanh Hoa has ramped up appeal for electronic component manufacturing, especially supporting suppliers to Foxconn. The appeal of competitive land lease prices and lower cost of local labour is further enhanced by very appealing tax incentives.

Last year, Ho Chi Minh City had lease prices of $147 per sqm, while in other southern IZs, the price was up 4.9 per cent year-on-year to $107 per sqm in Binh Duong, 6.5 per cent to $98 in Dong Nai, 7.8 per cent to $123 in Long An and 18.1 per cent to $65 in Ba Ria-Vung Tau.

Savills industrial services manager John Campbell said increasing prices and occupancy levels in key IZs in Vietnam might challenge multinational businesses requiring locations near major cities like Hanoi and Ho Chi Minh City.

“Rising lease prices are a growing concern for low value-added manufacturing, or low margin industries such as textiles and furniture,” Campbell said. “The current rates are, for the most part, still acceptable to multinational high value manufacturers such as hi-tech, supporting industries, and automotive.”

“Should prices continue on the same trajectory they have been on since 2018, regional competitiveness may slide unless more industrial land supply is deployed in key locations to accommodate demand and stabilise prices,” he said.

However, very low labour costs coupled with extremely low energy costs make operations in Vietnam the cheapest location based upon analysis of industrial real estate at 54 markets in 21 countries, led by Hanoi, Savills Vietnam reported.

These low costs make Vietnam highly attractive to multinationals setting up operations in the country, but the government is actively targeting higher value companies.

Savills Vietnam deputy managing director Troy Griffiths said: “The government has been investing heavily in all manner of infrastructure while promoting industrial clusters to attract businesses higher up the value chain.

“High levels of corporate taxation relief are also available to ensure healthy regional competition.”

Savills Hanoi director Matthew Powell said: “Escalating demand in some provinces can also be explained by new developments, new infrastructure, new roads, ports, and airports. We have seen this phenomenon around the world, people are thinking there is light at the end of the pandemic tunnel. We are seeing increasing real estate sales in many different countries, including the UK and China.”

The Department of Economic Zone Management announced a further combined 201,000ha over 561 new IZs are approved for master planning integration in addition to the 374 already established. Of these new IZs, the 259 utilising 86,500ha are yet to be established and represent 43.1 per cent of the total new area.

IZ infrastructure will also need to continue being improved. Policies, mechanisms, and management are continually being refined for greater efficiencies. These new projects and initiatives will be essential for accommodating the new wave of investments and industrial relocations, according to Savills Vietnam.

Location of the new IZs is also important as most manufacturing and logistics tenants still rely on key industrial provinces or tier 1 locations. Projects in tier 2 regions will seek FDI with more competitive lease prices and vacant supply, but more investment into supporting infrastructure and intermodal transport networks are vital to the continued development of these emerging provinces.



  • Hong Kong firm done buying Coke Cambodia

    Swire Coca-Cola Ltd, a wholly-owned subsidiary of Hong Kong-listed Swire Pacific Ltd, on November 25 announced that it had completed the acquisition of The Coca-Cola Co’s bottling business in Cambodia, as part of its ambitions to expand into the Southeast Asian market. Swire Coca-Cola affirmed

  • Cambodia's Bokator now officially in World Heritage List

    UNESCO has officially inscribed Cambodia’s “Kun Lbokator”, commonly known as Bokator, on the World Heritage List, according to Minister of Culture and Fine Arts Phoeurng Sackona in her brief report to Prime Minister Hun Sen on the night of November 29. Her report, which was

  • NagaWorld union leader arrested at airport after Australia trip

    Chhim Sithar, head of the Labour Rights Supported Union of Khmer Employees at NagaWorld integrated casino resort, was arrested on November 26 at Phnom Penh International Airport and placed in pre-trial detention after returning from a 12-day trip to Australia. Phnom Penh Municipal Court Investigating Judge

  • Angkor Beer, 30 Years of Prestige and Still Counting

    Let’s celebrate 30 years of prestige with Angkor Beer. In this 2022, Angkor Beer is 30 years old and has been staying with Cambodian hearts in all circumstances. Head of core beer portfolio, EmYuthousaid, “We have been with Cambodians for three decades now. We, ANGKOR Beer, pride

  • Sub-Decree approves $30M for mine clearance

    The Cambodian government established the ‘Mine-Free Cambodia 2025 Foundation’, and released an initial budget of $30 million. Based on the progress of the foundation in 2023, 2024 and 2025, more funds will be added from the national budget and other sources. In a sub-decree signed by Prime Minister Hun Sen

  • Two senior GDP officials defect to CPP

    Two senior officials of the Grassroots Democratic Party (GDP) have asked to join the Cambodian People’s Party (CPP), after apparently failing to forge a political alliance in the run-up to the 2023 general election. Yang Saing Koma, chairman of the GDP board, and Lek Sothear,