Southern Vietnam’s industrial property market is heating up, helping developers to make a profit and resulting in the prospect of new supplies.
Industrial property developer Sonadezi Giang Dien, based in Dong Nai province near Ho Chi Minh City, reported net revenue of VND165 billion ($6.97 million) in the second quarter of this year, doubling that of the same period last year, and VND70 billion in after-tax profit, 3.2 times higher than a year earlier.
The firm's Q2 financial report shows that its industrial land segment contributed VND34.5 billion ($1.46 million) to this revenue, up 5.6%, and the ready-built factory segment saw a 49% increase to VND32 billion ($1.35 million).
Sonadezi Giang Dien posted its January-June net revenue and after-tax profit at VND250 billion ($10.57 million) and VND103 billion ($4.35 million), up 44% and 119% year-on-year, respectively.
IDICO, another industrial developer in the south with four industrial parks covering 3,267 hectares altogether, says its current occupancy rate is about 54% and the average rental is $123 per square meter.
An IDICO report shows that its 2022 total revenue is VND3.21 trillion ($135.8 million), including VND2.7 trillion ($114 million) from its industrial infrastructure business, and after-tax profit is more than VND1.7 trillion ($71.7 million).
Some companies outside the industrial land sector started to invest in the business last year. One of them, Dong Phu Rubber JSC in the southern province of Binh Phuoc invested in the Bac Dong Phu Industrial Park JSC in the province by buying 5.1 million shares for VND102 billion ($4.3 million).
At present, property company Him Lam, steel maker Ton Dong A and some other companies already have plans to plunge into industrial land developments to explore the sector’s potential.
Ho Chi Minh City is leading the country in terms of rent ($214-300/m2/whole term) and occupancy rate (95%), according to realty services firm Colliers Vietnam.
“The city has canceled three long-delayed industrial park projects, but added two new ones with a total area of 668 hectares. More supplies will also come as city authorities have allowed farm land smaller than 500 hectares to be turned into industrial land,” said Vu Minh Chi, a senior manager in industrial services at Colliers Vietnam.
“Provinces near the city like Binh Duong, Long An and Dong Nai are also the targets of industrial real estate developers now,” he added.
Chi noted that prolonged global economic headwinds and weaker demand from overseas markets have had negative impacts on the Vietnamese industrial property market but the outlook is still bright as the Southeast Asian country has been cementing its status as a new global manufacturing hub.
Normally, multinational companies have long-term investment strategies when choosing a destination to diversify their supply chains, he said.
According to property services firm Cushman & Wakefield Vietnam, southern Vietnam will not see new industrial real estate supplies in the second half of this year. However, next year will welcome about new 1,800 hectares, mostly in Binh Duong, Dong Nai and Long An provinces.
Another new 5,254 hectares will be available by the end of 2026, the firm projected.
Vietnam Real Estate Association chairman Nguyen Van Khoi said that between now and 2025, several new projects will appear across the country as green industrial parks combined with urban zones with many kinds of services available and in line with Vietnam’s going-green policies to drive the country’s sustainable development initiatives.