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Wednesday, June 19, 2024

Industrial real estate market stable despite pandemic

The Saigon Times

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HCMC – Although the Covid-19 pandemic has hit industrial hubs in the north and south hard, the local industrial property market remained a bright spot in January-September this year, according to a report by CB Richard Ellis Vietnam (CBRE).

In the nine-month period, the occupancy rates at industrial parks rose slightly and the average industrial land rentals remained stable in major industrial provinces.

Average occupancy at industrial parks in five key northern industrial cities and provinces – Hanoi, Bac Ninh, Hung Yen, Hai Duong and Haiphong – reached 78.5%, an increase of 50 basis points over the year-ago period. Similarly, the rate in four key southern industrial localities was 87.2%, up 0.2 of a percentage point.

The area of leased land lots was between three and 25 hectares, with the most common areas from three to five hectares, mainly being demanded by furniture and electronics manufacturing, logistics and packaging enterprises.

The leasing of ready-built warehouses and factories remained stable due to significant supply coming into operation since 2019. The strong growth of e-commerce and logistics companies since the Covid-19 outbreak has spurred demand for storage space and distribution facilities.

In the third quarter of the year, the demand for industrial land, warehouses and factories declined slightly due to restrictions on interprovincial travel, but CBRE expected the market would become active again after restrictions were gradually removed this quarter.

CBRE’s report also showed that the scarcity of assets in prime locations in Hanoi and HCMC has prompted many occupiers to search for places in satellite cities to enjoy proximity to large populations and relatively cheaper rent. HCMC’s and Hanoi’s connectivity with nearby provinces has been gradually improved thanks to major infrastructure projects being completed and those under construction, such as the Trung Luong–My Thuan and Dau Giay–Phan Thiet expressways in southern Vietnam, and Van Don–Mong Cai and Ninh Binh–Haiphong expressways in northern Vietnam.

With drastic changes during the pandemic, Vietnam’s industrial real estate market became an attractive opportunity for domestic and international investors. Recent difficulties showed the need to diversify the supply chain, expanding warehouses, especially cold storage for food and agricultural products.

Pham Ngoc Thien Thanh, associate director of CBRE Vietnam, Research & Consulting Services, said that short-term difficulties would soon be resolved, and that the market would maintain strong growth momentum in the long-term with expansion plans of foreign companies active in Vietnam.

Vietnam is an important market for industrial and logistics developers and tenants in the next three years. In addition, additional factors such as sustainable production and environment, social and governance standards are being evaluated carefully when developing new factories.

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