Industrial real estate offering vision for foreign expansion
Overseas investors continue to pour capital into the industrial real estate sector, showing their trust in Vietnam’s potential.
Binh Thuan People’s Committee has approved the consolidation between Becamex IDC and Sembcorp Development Vietnam Co., Ltd.’s subsidiaries from Singapore to develop three component projects within the first phase of the Becamex VSIP Urban-Service-Industrial complex and establish detailed planning for the complex’s second phase.
With the total investment capital of nearly $817.4 million, the Becamex VSIP Binh Thuan complex covers an area of nearly 5,000 hectares, with 3,000ha designed for an industrial zone (IZ) and the remainder for an urban area in the central province.
The construction is expected to be implemented in two phases, starting this year, and expected to be finished in 2030. Becamex IDC and its member companies are investing and managing dozens of IZs across the country, with a total area of nearly 32,000ha.
Besides this, Sojitz Corporation from Japan is looking for a partner to develop an IZ in various regions to serve its expansion in Vietnam.
Tran Thi Thu Huong, vice president of Sojitz, told VIR that the company is open to working with anyone, given that it finds a suitable land plot and partners.
“We prefer cooperating with partners who have experience in dealing with administrative procedures and land clearance. Sojitz will then be in charge of developing the infrastructure and marketing,” Huong said.
“The pandemic does not impact our plan to expand operations in Vietnam because we always have a long-term investment vision. Vietnam has the highest scores in Southeast Asia in Sojitz’s evaluation of investment environments. The criteria combine social stability, labour productivity, infrastructure, manufacturing, and logistics expenditures, and geographical position,” Huong added.
At present, Sojitz is the largest shareholder with a 50.2-per-cent stake of Long Duc Investment Pte., Ltd., the developers of Long Duc IZ, and 60 per cent of Long Binh IZ in the southern province of Dong Nai.
Meanwhile, Sonadezi Binh Thuan JSC, a member of Japanese industrial real estate investor Sonadezi Corporation, is completing the final procedures for developing Tan Duc IZ in Binh Thuan with the total capital of $52.17 million.
At present, the investor completed the pre-feasibility report for the project and paid a deposit to ensure its development. The investor expected to implement the construction next year. Sonadezi Corporation is also operating 10 IZs in Dong Nai and Ba Ria-Vung Tau provinces.
Statistics published by the Ministry of Planning and Investment stated that Vietnam’s real estate market attracted $2.12 billion in foreign direct investment over the past 10 months, ranking third among other sectors attracting such investment this year.
Besides this, the supply of industrial property reported an on-year increase by 17 per cent in quantity and 23 per cent in land area in the first half of this year, such as in Bac Ninh where six projects have been built, or provinces such as Bac Giang (six projects), Haiphong (14), Long An (nine), and also Ba Ria-Vung Tau (seven).
Binh Duong authorities stated that in the first three quarters of the year, the total disbursed capital for industrial real estate was $156.5 million, equalling 115.57 per cent compared to the expected figures from before. The accumulated figure as of the end of September was $695.5 million, accounting for 60.35 per cent of the approved capital.
John Campbell, manager of industrial services at Savills Vietnam said, “Social distancing and domestic travel restrictions continue to pose difficulties for developers trying to lease their land, factories, and warehouses, as they and their potential occupiers cannot undertake site visits in other provinces.”
Campbell added, “However, the rollout of vaccinations and the promised vaccine passport programme are instilling confidence into landlords and investors alike. Given the obstacles facing this segment, the industrial sector continues its fight during the pandemic.”
To date, Vietnam has 394 IZs with an area of 121,900ha nationwide. 286 of these IZs are in operation with an average occupancy rate of nearly 72 per cent. The remaining 108 units are under construction or currently in the stages of compensation and also site clearance.
The government is encouraging investors to develop IZ infrastructure. Among those calling for foreign investment in 2021-2025 are some large-scale IZ projects, such as a unit in the north of Ben Luc district of Long An province.
The National Assembly has adopted the national land-use master plan for 2021-2030, with a vision to 2050, and a 5-year land-use plan for 2021-2025. Accordingly, by 2030, the total land area for industrial property will rise by an additional 120,000ha. In 2021-2025, the designated land area for industrial real estate will increase by 62,000ha.