The fourth wave of Covid-19 impacted some factories to shut, disrupting the circulation of products and provide chains. However, the commercial actual property market continued to file optimistic developments from overseas funding actions and modifications in authorities insurance policies.
Market development potential and driving power
In the second quarter of 2021, within the northern market, some factories corresponding to Foxconn have lately resumed operation after a interval of closure. However, within the South, plenty of workshops and manufacturing facility elements in industrial zones are nonetheless in a state of momentary suspension.
Mr. John Campbell, Manager of Industrial Real Estate, Savills Vietnam mentioned: “The closure of production plants is one of Vietnam’s prudent steps to deal with. This may have a certain influence on the overall growth momentum, however, with industrial real estate, I think we need to look long-term and believe in the potential and growth momentum of the market.”
The factors that make Vietnam one of the strongest manufacturing and logistics markets in the world, are still there or are continuously improving such as: stable politics, business environment, geographical location fit, dynamic workforce. In particular, Free Trade Agreements can be seen as a long-term solution for Vietnam, supporting the transfer of knowledge and technology, thereby promoting the transition from manufacturing to low-cost industries. low-value and local to higher-value industries. Even in the short to medium term, we still see a lot of big industrial investment in Vietnam.”
Head of Industrial Real Estate Division Savills Vietnam said that the market still recorded quite good activities, specifically: “As of June 20, 2021, the entire registered FDI within the trade sector manufacturing reached USD 6.97 billion, down barely from USD 8 billion within the first 6 months of 2020. However, the present manufacturing capital continues to be at USD 3.38 billion, larger than USD 3.23 billion in the identical interval. interval of the earlier yr. The market additionally obtained many giant investments within the first half of the yr. For instance, within the North, Jinko Solar Hong Kong Company has invested practically 500 million USD in Song Khoai Industrial Park, in Quang Yen (Quang Ninh); or Fukai Technology of Singapore invested in Quang Chau Industrial Park in Bac Giang province.”
The North continues to draw buyers
Mr. John Campbell commented: “The average land rent in the southern key economic region such as Binh Duong, Dong Nai and Long An is usually higher than in the provinces in the northern economic region such as Hung Yen, Bac Giang or Bac Ninh. In the past 3 years, land prices in some areas in the South have increased sharply. However, the current situation has an interesting change. The Northern region has attracted many investments in the first 6 months of the year, with the 5 largest investment deals in the manufacturing sector not recorded in the Southern market. Three of these five deals took place in the Northern market and the other two in the Central region. The northern market is currently receiving a lot of attention from investors, so we can expect that the rental price of industrial land in this area and a number of key industrial parks in the south will record slight increase again at the end of the year.”
Some areas corresponding to Bac Giang, Hung Yen, Quang Ninh and Hai Phong are locations with nice potential for industrial improvement. In the northern key financial area, Bac Giang is turning into more and more enticing for funding actions in manufacturing in addition to logistics. In addition, buyers are additionally shifting to different areas corresponding to Hung Yen and different provinces which are additionally well-known for his or her potential in manufacturing and logistics. “We have also seen many large investments in Quang Ninh as well as Hai Phong, as evidenced by a lot of investment activities taking place in this area in recent times,” mentioned Mr. John.
In the southern area, Long An is now rising as a horny vacation spot for buyers. Due to the excessive occupancy charge in industrial initiatives in Binh Duong and Dong Nai provinces, many buyers have chosen Long An to ascertain distribution facilities and logistics initiatives. In addition, the event potential of Ba Ria – Vung Tau within the subsequent few years is sort of giant, this province already has some good industrial initiatives corresponding to Phu My Industrial Park.
Expectations from modifications in coverage
Currently, there are only a few builders who can develop residential and industrial areas inside industrial parks, whereas the demand for these areas is rising. With actions and efforts to good the Draft Decree to exchange Decree No. 82/2018/ND-CP, the Ministry of Planning and Investment is opening up alternatives to develop high quality industrial park initiatives.
Mr. Matthew Powell, Director of Savills Hanoi mentioned: “High-quality industrial parks all over the world typically do properly within the general planning of commercial park initiatives, guaranteeing that the commercial mission harmoniously integrates housing, retail, training and healthcare components. well being for various topics. These fashions are doing properly within the markets of China, Malaysia, Indonesia and Thailand.”
In Vietnam, in the long run, a high-quality industrial park can have a development benefit in a vibrant market. The integration of housing components within the industrial park shouldn’t merely cease at having a spot to relaxation for employees, however also needs to present amenities for high quality housing, retail, training and leisure, to serve the wants of the general public. serve the varied wants of employees, professionals, and tenants. The industrial park mission has since created an funding attraction, particularly attracting companies working within the high-value industrial sector. The adjustment within the coverage is due to this fact anticipated to result in optimistic modifications, which might be thought-about as one of many initiatives to assist the Vietnamese trade have many initiatives to meet up with the funding development out there.