FDI firms have their pick of industrial properties

Industrial properties are forecast to meet the needs of foreign direct investment (FDI) enterprises in Vietnam, according to Savills Vietnam’s industrial market report.

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A bird’s eye view of Bien Hoa Industrial Park 2 in the southern province of Dong Nai. Industrial properties are forecast to meet the needs of foreign direct investment enterprises in Vietnam – Photo: Le Anh

In a report released last week, the agency noted Vietnam had 326 industrial parks covering some 95,500 hectares of land, as of last June, with rentable land accounting for 69% (65,500 hectares).

Of these, 251 industrial parks (66,200 hectares) are in operation with occupancy rates averaging 74%. Besides this, there are 75 industrial parks (29,300 hectares) under construction or in the process of site clearance.

John Campbell, senior consultant of industrial services at Savills Vietnam, stated that the growth of the industrial property market can be attributed to FDI enterprises’ move from China to Vietnam to avoid the fallout from the US-China trade war.

Some enterprises that have moved their workshops to Vietnam are Hanwha, Yokowa, Huafu and Goertek. Lenovo, Sharp and Foxconn are also considering moving to Vietnam.

According to Campbell, many projects will be set up in the country in the near future as investors in industrial property projects are getting farmland converted to industrial land. Central localities such as Thua Thien Hue, Quang Nam and Quang Ngai are receiving countless requests for conversions due to their competitive land lease rates.

Industrial land is plentiful and comes in different sizes with varying rental terms. However, ready-built workshops for lease will soon start trending to meet the diverse demands of enterprises, particularly those of small- and medium-sized enterprises, Campbell predicted.

Cheap labor and investment incentives will remain factors in attracting foreign investment. Nonetheless, Vietnam should focus on investment quality rather than quantity, according to Savills Vietnam.

In addition, Vietnam needs to select projects carefully to increase its value chains and competitiveness as well as to develop sustainably.

According to some firms seeking land for lease in Dong Nai, Binh Duong and Long An, rates were fairly high last year and in this year’s first half.

In particular, at VSIP 2 in Binh Duong, rates have picked up by some 30% against 2018, at US$100-120 per square meter. In Dong Nai and Long An, the rates are US$80-100 and over US$100 per square meter, respectively.

To meet the rising demand, ready-built workshops developed by secondary builders have been on offer, including BW Industrial, covering 247 hectares of land in various localities, in the January-June period. KTG Industrial covers 120 hectares of land, with eight workshops for lease in Dong Nai, Hanoi and Bac Ninh.

Besides this, investors with rubber farmland plan to convert it into industrial land to meet the demands of production firms.

Saigon Times