WORDS ON THE STREET 70th anniversary of Hanoi's Liberation Day Vietnam - Asia 2023 Smart City Summit Hanoi celebrates 15 years of administrative boundary adjustment 12th Vietnam-France decentrialized cooperation conference 31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Real estate
Vietnam northern industrial property: Demand stays robust despite prolonged pandemic
Linh Pham 17:02, 2020/11/29
Tenants are given opportunities to evaluate and secure land from distance thanks to intensified investment in online platforms.

Demand for industrial property in the northern region of Vietnam in the third quarter this year remained strong amidst the prolonged pandemic, according to leading professional real estate services and investment management firm JLL.

 Land bank for industrial property in the north is expected to rise in the next five years

Travel restrictions during Covid-19 outbreaks have made it difficult for traditional site inspections and direct meetings, but the demand for industrial land kept momentum in the third quarter this year (3Q20) as Vietnam is still a favorable destination for investors.

The main sources of demand for industrial land remained manufacturers who wished to diversify their manufacturing portfolios outside China – especially in high-tech industries. Meanwhile key tenants for ready-built-factory (RBF) continued to be small- and medium-sized enterprises (SMEs).

To support the demand, more and more online platforms have been invested such as site virtual tours, online webinars, upgraded industrial parks (IPs)' websites.

Therefore, tenants still had opportunities to evaluate and secure land from distances. In addition, several transactions started before the outbreak and were only signed in 3Q20, which all brought the average occupancy rate up 74%, up by 160 basic points (bps) from that in 1Q20.

 Industrial property in northern Vietnam in third quarter 2020. Chart 1: Total stock and occupancy rate. Chart 2: Average land and factory rents. Source: JLL Research

Sufficient land bank for upcoming investments

The supply for industrial land in the north is expected to rise further in the next five years to capitalize on the increasing demand in the region.

With large existing land bank, Haiphong and Bac Ninh were leading localities for industrial land supply in the north.

In anticipation of the upcoming investment waves, northern cities and provinces have planned to open new IPs and expand existing ones, among them Hung Yen and Hai Duong are the most active localities in new IP developments.

Land prices reach new record high

Given Vietnam’s potential as one of the most sustainable manufacturing hubs, most IP developers in northern markets maintained strong bargaining power regardless of Covid-19.

This lifted land prices to a new peak of US$102 per square meter (sqm) per lease term in 3Q20, up 7.1% on-year. RBF rents also inched up slightly, ranging from US$4.1-5.2 per sqm per month in 3Q20, an increase of 2.1% on-year.

Outlook

Although Covid-19 may temporarily disrupt investments in Vietnam, there will remain great interests in the country, which is considered a new regional industrial powerhouse. This will support both demand and supply for industrial properties in Vietnam and the north in future.

Moreover, some innovations during the outbreak including virtual applications and online marketing platforms have shown effective and are expected to get more popular. Therefore, those developers who wish to push forward businesses amidst the rough time should consider seriously such platforms.

RELATED NEWS
TAG: Industrial property north Vietnam manufacturer China industrial park
Other news
16:20, 2024/11/20
Hanoi to add nearly 6,000 social housing units by 2025
The construction of social housing in the capital has reached only 9% of the target set in the plan to build one million social housing units by 2025.
16:35, 2024/10/22
New international brands diversify Hanoi hotel offerings
Hanoi's hotel market is also experiencing a decline in rental rates amid the seasonal lull in tourism and leisure activities.
20:57, 2024/10/21
Hanoi set to deliver new luxury apartments this quarter
Over 19,000 new apartments were delivered in the first nine months of this year, surpassing the total supply in 2023.
20:10, 2024/09/25
Hanoi's real estate market soars: Apartment transactions up 101%
The mid-range segment in Hanoi will continue to play a significant role in supply.
18:57, 2024/08/24
Hanoi to add 8,300 apartments to social housing reserves by 2029
Along with relieving housing pressure in central urban areas, the new social housing projects will also help to expand residential zones beyond the city's borders.
16:10, 2024/08/05
Hanoi real estate market: Developing in right direction
The price increase for apartments in Hanoi in the first half of 2024 compared to the beginning of 2023 is 31%.