The movement of foreign investors relocating their production bases to Vietnam will be a driving force for the development of the industrial real estate sector.
The demand for industrial real estate is on the rise
A survey by Jones Lang LaSalle (JLL) Vietnam found that in the first half of 2018, the industrial land area of the northern key economic zone increased by 1,100 hectares, compared with the same period of 2017, to 11,366 hectares.
Hai Phong and Bac Ninh gave the most industrial zones in the north, accounting for 46 percent of total supply. It is expected that about 18,116 hectares of industrial land would be put into use by 2020.
JLL commented that the industrial zones in the north of Vietnam are very attractive destinations for manufacturers who want to leave China.
The industrial land supply in the south has also increased rapidly with 37,020 hectares of land leased by the end of June. Most of the supply comes from Ba Ria – Vung Tau, Tay Ninh and Binh Phuoc. About 11,940 hectares of industrial land are expected to join the southern market in the next three years.
A report from the Foreign Investment Agency (FIA) showed that in the last eight months, foreign investors committed investment capital of $10.72 billion in manufacturing and processing industries. This investment is believed to help boost the demand for leasing land in industrial zones.
According to the Kinh Bac Urban Development Corporation (KBC), in the first six months of 2018, KBC earned net revenue of VND1 trillion and net profit of VND291 billion thanks to the big revenue from three IZs – Quang Chau, Que Vo and Trang Due.
A KBC representative said about 300 enterprises now work as satellite companies for Samsung, half of which set their production bases in Que Vo IZ.
South Korean LG Group has three factories in Trang Due IZ in Hai Phong, while KBC has applied for permission to expand the IZ in the third phase which would have total area of 687 hectares.
In Quang Chau IZ in Bac Giang province, Samkwang, one of the first-tier vendors of Samsung, has leased 10 hectares of land to organize production. The IZ may attract more 2-tier vendors.
In the south, Becamex IDC reported the net revenue of VND3.494 trillion in the first half 2018, fulfilling 81 percent of the yearly business plan.
In mid-May, BW Industrial, a joint venture between Warburg Pincus and Becamex IDC, was set up in Binh Duong.
Capitalized at $200 million, of which 70 percent is from the foreign partner, the joint venture aims to provide modern storehouses, ready-made workshops and other products related to industrial real estate.
The joint venture has acquired a land fund of 2 million square meters in Binh Duong, Dong Nai, Hai Phong, Hai Duong and Bac Ninh.
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