Bac Ninh province leads the way in northern Vietnam industrial growth: Knight Frank

Bac Ninh province, a neighbor of Hanoi, is the driving force behind northern Vietnam’s industrial growth, according to a new study by Knight Frank.

Released Friday, the study highlights key trends and drivers for northern Vietnam factories, warehouses and industrial parks.

The study notes that the average asking rent for ready-built factories across the entire northern region market reached $5 per square meter per month in Q3/2024, an increase of 0.6% quarter-on-quarter and 3.4% year-on-year. This reflects strong demand for modern, high-standard factory spaces in the region.

Bac Ninh province, located on the outskirts of Hanoi, is driving the northern region’s industrial growth, the study says. The province’s strategic location and well-developed industrial infrastructure have made Bac Ninh a hotspot for leasing transactions, with projects from international developers like Frasers Yen Phong Phase 1 and KTG Yen Phong attracting tenants from various industries.

Meanwhile, the launch of the BWID ESR Nam Dinh Vu project in Hai Phong city has added over 70,000 sqm of new factory space. Despite this significant addition in supply, the overall market occupancy rate across the northern region remained high at approximately 90%, highlighting strong demand for factory spaces throughout the area.

Warehouses tell a similar story, with Bac Ninh emerging as the preferred destination for developing ready-built warehouses (RBW). The province's proximity to major transportation routes and strong investment waves have contributed to its dominance in the market, accounting for around 44% of total inventory as of Q3/2024.

With the new supply, the market-wide asking rent for modern ready-built warehouses saw a 3.2% year-on-year increase to $4.6 per sqm per month. During Q3/2024, occupancy rate in the northern market remained stable at 85%, up 4.6% year-over-year, in which new transactions were mainly recorded in the recent launches in Hai Phong and Bac Ninh provinces, reflecting the steady demand for renting high-quality warehouses in prime locations.

The industrial land sector on the supply side has moved a little more slowly due to extensive permit obtaining processes and infrastructure build-outs. according to Knight Frank.

The average asking price for industrial land reached $130 per sqm per month in Q3/2024 with an increase of 3.1% year-on-year, reflecting sustained demand in the region.

Land lease activity remained robust, with approximately 60 ha of net absorption recorded during the quarter, up 33% quarter-over-quarter, but down 48% year-on-year. Bac Ninh and Hung Yen provinces led the market for absorption, registering the highest number of new investment projects.

Bac Ninh province granted in-principle approvals or investment registration certificates to projects worth $5.58 billion last month. The approvals were granted on the sidelines of a conference held to announce the provincial master plan and promote investment in the northern province neighboring Hanoi.

Among those receiving in-principle approvals was the Hong Hac-Xuan Lam ecological urban area in Thuan Thanh district, in which VietinBank Trade Union Investment JSC will invest nearly $1.07 billion.

This marked an increase of over $998 million from previous registration for this project, but the massive increase in investment was not explained.