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.



  • Phnom Penh unveils rules for post-lockdown transition

    The Phnom Penh Municipal Administration issued a set of detailed guidelines for the seven days to May 12 after the capital emerges from lockdown at the onset of May 6. In the 14-page document signed by municipal governor Khuong Sreng released on the evening of May 5, the

  • SBI LY HOUR Bank Launches Cross Border Money Transfer Service between Cambodia and Vietnam on RippleNet, utilizing DLT

    SBI LY HOUR Bank Plc and Hanoi-based Tien Phong Commercial Joint Stock Bank (TPBank) on Friday launched the first Cambodia-Vietnam money transfer service in real currency via RippleNet, provided by SBI Ripple Asia Co Ltd to provide safe, fast and convenient services. SBI LY HOUR

  • Gov’t issues guidelines as lockdown nears end

    The government has issued a five-page set of instructions to be enforced when the three-week lockdown of Phnom Penh and adjacent Takmao town in Kandal province ends on May 6. According to an announcement signed by Prime Minister Hun Sen on May 4, the instructions cover a

  • Cambodia ready to exit LDC status

    Cambodia is well-prepared to minimise economic risks when it graduates from its Least Developed Countries status, according to a senior official at the Ministry of Commerce on May 7. Four LDCs – Cambodia, Laos, Bangladesh and Nepal – met at a virtual workshop last week to explore potential

  • Tottenham Hotspur to wear ISF Cambodia logo on jerseys in match against Sheffield United

    Last year, the Indochina Starfish Foundation (ISF) – an NGO providing education to underprivileged children in Cambodia – made global headlines with its “socially distanced” football initiative. This year, a world-class football club – Tottenham Hotspur FC – will wear special edition jerseys to show their support for ISF

  • Nine US franchises eye Cambodia debut

    Nine famous US franchising companies are looking for business opportunities and expansion into Cambodia to build a footstep for a strong foundation in Southeast Asia. The US embassy in Phnom Penh, in partnership with the US Foreign Commercial Service and with support from the American