Recent C&W report indicates strong demand for industrial land into the future.
Demand for industrial land is on the rise in both Hanoi and Ho Chi Minh City, making the industrial segment a promising investment channel, according to the latest report on real estate in the fourth quarter of 2015 from Cushman &Wakefield (C&W), released on January 19.
In Hanoi the overall market performance continued to experience gradual improvements, with average occupancy reaching well over 72 per cent in the quarter, up 1.7 ppts year-on-year. Six out of eleven industrial parks (IPs) (46 per cent of the total stock) were fully occupied.
Among the remaining IPs with vacancies at the end of the quarter, the Hoa Lac Hi-tech Park recorded the highest vacancy, at 70 per cent, or 346 ha.
Net Absorption/Asking Rent in Hanoi
The average asking rent at IPs in Hanoi continued to be the highest in the northern region and about 50 per cent higher than in Hai Phong and Bac Ninh, at $111 per sq m per month.
Average occupancy rates, which remained at 71 per cent, were mainly due to lower occupancies of under 50 per cent at three IPs in Nha Be, Cu Chi and Binh Chanh districts, which started operations only recently. The majority of established IPs reported robust occupancy rates of above 90 per cent.
Average asking rents in the quarter stood at approximately $126 per sq m per month, about double the figure in neighboring provinces such as Long An, Binh Duong, and Dong Nai.
Net Absorption/Asking Rent in Ho Chi Minh City
C&W predicted that an additional supply of about 6,000 ha from 14 identified IP projects will enter the Hanoi market through to 2020. By 2030 the market will have 33 IPs with an area of 8,000 ha in total.
In Ho Chi Minh City the total increase in industrial land to 2030 is projected at approximately 3,000 ha, 85 per cent higher than the existing stock. Twelve new IPs are expected to be added to the 18 currently in operations by 2020.
With the TPP and other free trade agreements Vietnam has signed recently, stable economic conditions, favorable government policies, and low labor cost, the country will attract more investments from foreign manufacturers as they look to enjoy tariff benefits, with demand for industrial land rising as a result.