Northern Vietnam short of industrial land as demand rises

Vietnam's northern region will see a shortage of industrial land in the second half of this year as demand exceeds supply, while the situation will be more balanced in the south, according to real estate consultancy Cushman & Wakefield.

The shortage in the north will see average rents increase by 5% over June figures by the year-end, subject to new and expanding FDI manufacturers targeting the region, the firm notes in a report released Thursday.

The supply of ready-built warehouses in the north is likely to increase by approximately 240,000 square meters towards the end of the year to support immediate manufacturing demand. For ready-built factories, the increment in new supply is expected to decelerate after a significant boom in stock (40% total supply growth in the region) during the first half.

Meanwhile, in the Southern Key Economic Zone (SKEZ), which includes Ho Chi Minh City, Binh Duong, Dong Nai, Long An, and Ba Ria-Vung Tau, industrial land supply is forecast to keep increasing until 2025 and beyond.

“SKEZ looks to welcome 23,000 hectares to the market, which doubles the current stock. This large quantity of future industrial land expects to meet the incoming demand from the manufacturing and logistics sectors,” the report says.

Despite the increase in space, the average asking price is expected to continue growing, indicating a strong market performance from the sector. By the end of this year, SKEZ industrial land rents are forecast to increase by 3-5% compared to June.

For ready-built warehouses, SKEZ expects to welcome an additional 4,000,000 sq.m plus of new supply in the 2022-2025 period and beyond. The surge looks to match the demand following the entry of notable international manufacturers.

For ready-built factories, “Vietnam’s positive industrial prospects in the next few years influence the large influx of supply that looks to match the incoming industrial demands from both international and local manufacturers.”

Local manufacturers are developing a stronger appetite for logistics use, the report mentions.

It says Danish toymaker Lego's project to invest more than $1 billion in developing a modern manufacturing facility in Binh Duong’s VSIP III Industrial Park marks an outstanding performance in FDI attraction by the southern region.

VSIP III, under construction now, will cover more than 1,000 hectares. It is being developed by Vietnam-Singapore Industrial Park Co. Ltd., a joint venture between Singapore’s Sembcorp Industries and Binh Duong’s Becamex IDC, a leading Vietnamese urban and industrial property developer.