Industrial real estate heading upwards

The restoration of international flights to Vietnam and new projects coming into being or coming into operation boosted the industrial real estate market in early 2022.

According to property consultants Jones Lang LaSalle (JLL), the land supply for industrial zones and ready-built factories grew to 26,724 ha and 3.8 million sq m, respectively, by the end of the first quarter.

In Vietnam’s southern and Mekong Delta region, there were increases in new supply in the industrial park land and ready-built factory market of 85 per cent and 89 per cent, respectively, meaning that demand for renting land and factories is still high and increasing.

The industrial real estate market in the south and Mekong Delta, especially in Binh Duong and Long An provinces, still receives attention from investors. Leasing prices of industrial land in the region also grew sharply in the first quarter, to a new peak of $120 per sq m each leasing cycle, an increase of 9 per cent year-on-year. As for the ready-built factory market, the average rental price is $4.8 per sq m each month.

Meanwhile, in the north, the total industrial land area as of the end of the first quarter was more than 10,024 hectares, while the supply of ready-built factories was stable at 2.2 million sq m.

The occupancy rate at industrial parks in the north was 80 per cent, up from 75 per cent in the same period last year. The occupancy rate at ready-built factories also continued to be high, at 98 per cent.

The average price of industrial land reached $109 per sq m per lease cycle, down slightly from the previous quarter but up 9.2 per cent year-on-year. The rental price of ready-built factories remained unchanged quarter-on-quarter, reaching $4.7 per sq m each month, but was up 3.5 per cent year-on-year.

According to JLL, besides price and location factors, the appearance of green development industrial park models and the application of technology in operations management are predicted to be competitive advantages in attracting investment in the near future. Due to the increasingly limited industrial land fund, multi-story ready-built factories are being considered as near-future solutions by investors to help expand space and increase land-use efficiency.