Bright outlook for industrial real estate
Bright outlook for industrial real estate
The industrial real estate segment is expected to remain a "shining light" in terms of investment volumes, development of quality ready-built facilities and strong price performance, according to property consultancy Knight Frank Vietnam.
High-rise ready-built factory in the Long Hậu Industrial Park in Long An Province. The industrial real estate segment is expected to remain a "shining light" in Việt Nam. — Photo courtesy of longhau.com.vn |
Alex Crane, the company’s managing director, said supply in the ready-built leasing segment has tripled since 2016.
It was admittedly from a non-existent base, as he explained.
“Investors had to build their own facilities [before 2016]. The maturing of the development market now means ready-built inventory is set to increase 65 per cent in the next three years, which is a tremendous amount and this is encouraging for growth of existing occupiers and new-to-market entrants.
“With this amount of space, we will see rents at stable, affordable levels which will be very encouraging for occupiers.”
Speaking at a Canadian Chamber of Commerce event held recently in HCM City, Crane also highlighted the significance of Decree No 08/2023/ND-CP, which allows bond issuers to extend their maturities.
However, he cautioned that many issuances utilising Decree 08 will now fall due this year alongside those issued in 2021, which would result in many developers feeling similar pressure from the capital market as in the last two years.
While interest rates have stabilised, access to credit for developers remains relatively high, he said, adding that his company believes as a result there would be a natural slowdown in supply, which could soften price reductions through the remainder of the year.
He said the forecast for new apartment launches in 2024 has been reduced by over 50 per cent from the earlier one in 2023 as a result of developers reviewing their timelines and pushing many of these developments into 2025 and 2026.
He said apartment prices in HCM City and Hà Nội were converging, and attributed it to Hà Nội's more rational market behaviour over the last few years, less speculation and more genuine demand.
While optimistic about Việt Nam's overall property market in terms of net demand, he cautioned about the country's growing comparative expense to regional peers. He cited examples of large manufacturers opting for other countries based on cost considerations, pointing to the need for Việt Nam to incentivise the best manufacturers to invest in the country, particularly given the global minimum tax is now applicable in Việt Nam, removing some tax incentives for large players.
Referring to regulatory changes, he welcomed delays in discussions about imposing additional taxes on a second property while the residential market finds a new market-led norm.
He also expressed optimism about the amendments to the Land Law, viewing it as a positive step for the market in the long term.
