Industrial real estate faces up to pressures

Feb 24th at 07:55
24-02-2023 07:55:53+07:00

Industrial real estate faces up to pressures

Although it was one of the rare segments to see positive growth in 2022, industrial real estate is forecast to suffer this year due to global macroeconomic uncertainties.

 

KB Securities Vietnam (KBSV) last month stated that the industrial real estate segment would face heightened challenges in 2023.

“The amount of disbursed foreign direct investment (FDI) is expected to be flat to the high base level of 2022, due to cautious sentiment towards the prospects of the global economy. However, Vietnam is still an attractive destination thanks to lower labor costs, land rental and investment costs compared to the region,” KBSV said.

Nguyen Phuong Thao, asset management director at Gaw NP Capital, told VIR that the supply of ready-built factories and warehouses was forecast to increase at the end of 2023.

“New supply will put pressure on rents and occupancy rates, possibly causing rents to level off or even decline,” Thao said.

However, Gaw NP Industrial’s projects in the provinces of Thai Nguyen, Haiphong, and Ha Nam still recorded positive results in the number of businesses asking to rent ready-built factories and warehouses.

“Businesses mainly come from China, South Korea, and some European markets. I think there are still many businesses that need to rent warehouses, especially small- and medium-sized enterprises, but they will carefully consider the price, project location, and supply chain,” she added.

In its industry outlook report issued in December, Bao Viet Securities said that unpredictable developments, US Federal Reserve interest rates increases, and introduction of a global minimum corporate tax were all challenges for Vietnam in attracting FDI from multinational enterprises into high-tech sectors.

In addition to these challenges, KBSV believes that industrial property in 2023 holds many decent prospects.

“The supply chain shift from China will continue to take place, and factories led by Foxconn, Luxshare, and Lego have all moved to Vietnam in recent times,” it said. “With the caution of new capital inflows, FDI will favour production expansion of existing enterprises and merger and acquisition of small-scale businesses.”

In addition, in the 2021-2025 public investment plan, infrastructure investment accounts for about 60 per cent of the budget. Disbursement of public investment is focused as an indirect motivation for industrial parks (IPs) when increasing attractiveness due to improving infrastructure leading to logistics convenience.

IPs in the provinces and cities are allocated large capital, including for key projects such as Chau Duc, Phu My 2, Huu Thanh, Tan Phu Trung (near Ring Road 3 of Ho Chi Minh City), and IZs in Bac Ninh and Haiphong.

According to Mirae Asset Vietnam Securities, having a large land bank for lease will help businesses promptly receive new investment capital, such as with Viglacera, Kinh Bac Urban Development Corporation, and Vietnam Industrial Park and Urban Development Corporation.

Accordingly, expansion projects in the Vietnamese market will give priority to leasing land in IPs where the factory previously existed, such as Foxconn expanding operations in Quang Chau IP, and LG continuing to expand in Trang Due IP.

Vietnam has over 560 IPs existing or planned, covering almost every province, with a total industrial land area of more than 58,000 hectares.

According to the Vietnam Association of Realtors, at the end of 2022, the occupancy rate of IPs across the country reached over 80 per cent. The occupancy rate in the southern provinces is about 85 per cent. A number in Hanoi, Ho Chi Minh City, Dong Nai, Bac Ninh, Bac Giang, and Binh Duong are almost full. Binh Duong has the highest occupancy rate in the country, over 95 per cent, with 29 IPs in operation.

Despite the high occupancy rate, industrial property recorded an increase in rents of about 10 per cent in 2022. The northern provinces averaged $100-120 per sq.m per lease term.

In the southern region, Ho Chi Minh City market recorded the highest average rent, ranging $180-300 per sq.m per lease term.

Long An province was next with $125-275, then Binh Duong province with $100-250 and Dong Nai province with $100-200 per sq.m per lease term.

By the end of 2022, IPs and economic zones nationwide had attracted over 10,000 domestic and nearly 11,000 foreign-led projects, with a total registered investment capital of more than $340 billion.

vir



RELATED STOCK CODE (1)

NEWS SAME CATEGORY

Property woes offer opportunity for some

After a period of rapid growth, the real estate market is currently in a restructuring phase to determine a more sustainable development direction, offering an...

HCM City reduces 2022 land rent for businesses by 30 per cent

The HCM City Tax Department has reduced land and water area rents from 2022 for those affected by the COVID-19 pandemic.

Bringing property prices closer to market value a key focus: NA's committee chairman

Bringing the official property prices closer to market rates remains a key focus in Viet Nam's revised Laws on Land, which is to be presented to and reviewed during...

Phu My Hung to bring more condos to the market this year

Real-estate developer Phu My Hung Development Corporation said it will continue to diversify its products in 2023, including condos with interiors completely...

Together for a long-term partnership

Despite market swings, foreign investment capital continued to flood heavily into several categories of Vietnamese real estate in 2022. Mergers and acquisitions...

How predictable can 2023 become for real estate?

Some experts continue to be sceptical about the possibility of the real estate market entering a calm period and freezing liquidity at this moment.

Potentialities in the land of nine dragons

With land in Ho Chi Minh City limited and the southeast provinces densely populated with projects, developers are beginning to settle in the Mekong Delta.

Hanoi to build 13 resettlement areas for Ring Road No.4 project

The city expects to complete the construction of the resettlement areas in 2024, with a total investment capital of VND13.36 trillion (US$563 million).

Identifying genuine hotspots

Transport infrastructure with regional connectivity will be accelerated in 2023, which is expected to boost the coastal real estate market and open breakthrough...

Sustainability a dynamic driving force for the market

With short-term investment and speculation in the real estate market slowing down and replaced by real demand, sustainability is gradually becoming the key to...

Real estate stocks

Construction stocks


MOST READ


Back To Top