Ready-built factories boost prospects for developers
Ready-built factories boost prospects for developers
A ready-built factory model is becoming the top choice of foreign investors in Vietnam thanks to the convenience and expenditure savings they offer.
Since the beginning of the year, RSL Group, a promotion and consulting service provider, has been busy working with many industrial park (IP) developers to connect foreign investors with ready-built factories (RBFs) and multifunctional facilities.
Dao The Anh, chairman of RSL Group, told VIR, “In recent years, we have seen the trend of shifting production from elsewhere to Vietnam. The characteristics of most of these businesses are small and medium-sized, with a need to minimise time and costs, so they are very interested in the pre-built, multi-functional factory model.”
According to RSL Group’s survey results implemented in the fourth quarter of 2023 at many IPs in the north, the demand for RBFs is increasing with occupancy ratios at 78 per cent, and net absorption reaching about 97,000 square metres among the total existing supply of 3.7 million sq.m. The demand mostly comes from the electronics, optics, and machinery industries, which are supporting large manufacturing companies in IPs.
“RBFs are the most optimal choice for them because of many outstanding advantages, such as saving maximum time and initial investment costs. In addition, businesses can be flexible in choosing the area to rent a factory as well as choosing the operating time of the project,” Anh said. “Another important factor is that these factories are all operated by professional management units, helping investors quickly resolve legal procedures.”
Businesses when choosing an RBF for rent will have time to learn about the local market, especially foreign groups. When businesses assess the market at its true worth, they can invest in building a quality factory to produce and develop stably.
“Manufacturers should choose a quality service that can freely change the production scale when necessary. They will be able to increase the rental area to produce or save costs with smaller factories,” Anh said.
The supply of RBFs is constantly increasing in localities with many IPs such as Haiphong, Hung Yen, Bac Ninh, Bac Giang, and Thai Binh.
For example, industrial property developer KCN Vietnam is eager to implement the construction of a ready-built warehouse and factory in Thuan Thanh III IP in Bac Ninh province. The construction kicked off in mid-April and represents KCN Vietnam’s debut venture in Bac Ninh, encompassing a 14-hectare area and anticipated to offer more than 90,000sq.m of top-tier RBFs available for lease in the market.
“The project is poised to attract interest from diverse areas, including high-tech, clean technology, electronics, light industry, food processing, and supporting industries. What sets this project apart is its top-tier infrastructure and a strategically advantageous location for expansion,” said Truong Khac Nguyen Minh, deputy general director of KCN Vietnam.
According to forecasts from RSL Group, from now to 2026, warehouse and factory rental prices are forecast to increase slightly, by 1-4 per cent annually. This year, RBF supply in the northern region is taking place with the entry of new factories such as CNC Tech in Vinh Phuc province, Frasers Yen My in Hung Yen, and Tuong Vien in Trang Due IP in Haiphong.
JLL Vietnam forecasts that the scale of this market will continue to expand, with about 2.5 million sq.m that will be put into use before 2026.
From January to May 20, newly registered foreign investment into Vietnam reached $11.07 billion, an on-year rise of 2 per cent. The disbursement level was estimated at $8.25 billion, up 7.8 per cent and the highest January-May figure over the past five years.
