Greater traffic access, quality see southern industrial rents hit new heights

Industrial land rents in southern Vietnam have reached new peaks as the manufacturing sector keeps expanding, according to consulting firms.

In Ho Chi Minh City, Vietnam’s largest economic hub, and adjoining Long An, the rents have set a new record of $270-290 per square meter for the whole lease cycle, according to Cushman & Wakefield Vietnam's latest report.

The report showed the $290 peak had occured in Long An province while HCMC recorded $270. The levels do not include management fees and value added tax.

The provinces of Binh Duong, Ba Ria Vung Tau, and Dong Nai - also part of the Southern Key Economic Zone - recorded the highest rents over the past three months at $110, $180, and $195 per square meter, respectively, according to the report.

The consulting firm noted the mentioned rents were quoted by industrial parks with the greatest traffic access and quality. For comparison, it said the average rent across the entire southern region in the second quarter was about $135 per square meter for the entire lease cycle.

Meanwhile, CBRE Vietnam said the second quarter’s industrial rents in HCMC, Long An, Binh Duong, Ba Ria Vung Tau, and Dong Nai increased by 8-13% year-on-year. Notably, the rents quoted by some outperforming industrial parks in the south have soared by 26% over the past 12 months.

International institutions like the World Bank, International Monetary Fund, and Asian Development Bank, as well as global banks have said the Vietnamese economy is getting back on track with post-pandemic recovery and the country increasingly becoming a global production base.

“We recorded a sharp increase in inquiries for production expansion from the end of the first quarter of this year upon the re-opening of Vietnam’s international borders,” said Huynh Buu Tran, chief operating officer of industrial property developer KCN Vietnam.

“The health of an economy is directly proportional to the efficiency of its supply chain system. Improving efficiency will help manufacturers, logistics providers, and regulators to minimize foreseeable lags, thus increasing output and reducing operating costs per unit,” she added.

Having acquired about 250 hectares of land in Vietnam with an investment of over $300 million, KCN is expanding its portfolio to capitalize on the country’s burgeoning manufacturing sector.

Manufacturing is the heart of a country's economic development, and domestic production development is a key measurement, said Cushman & Wakefield Vietnam CEO Trang Bui. She added the south of Vietnam was strengthening its position as an integral part of the global supply chain.