Prices for leased industrial land are anticipated to remain high

In the next three years, rental land price in industrial zones may increase by 10% in the North and 13% in the South each year.

According to CBRE’s report, Vietnam’s industrial park real estate market continues to record many positive signals after Vietnam reopens international routes. Several projects on industrial areas and warehouses were started in many localities. The demand for leasing gradually recovered and the number of industrial lands and warehouse rentals received increased by 10% and 7% respectively over the same period.

Occupancy rates were recorded at 80% in the North and 90% in the South in the past 6 months. The five northern key cities and provinces including Hanoi, Hai Phong, Bac Ninh, Hung Yen, and Hai Duong currently have 15,000 hectares of industrial land. Meanwhile, the main cities in the southern region are Ho Chi Minh City, Dong Nai, Binh Duong, and Long An with a total land area of ​​more than 30,000 hectares.

Taking advantage of the positive occupancy rate, the average land rent recorded an increase in the main industrial cities of 5-12% in the North, and 8-13% in the South compared to the same period in 2021. In some typical industrial parks, the offer price can even increase up to 20% in some projects in the North and about 26% in the South.

“With warehouse supply rapidly increasing in many localities, warehouse rent fees are kept at a stable level. Industrial land prices are expected to remain high, while warehouse and factory rents are expected to fluctuate slightly in Vietnam. 0-3%/year”, CBRE stated.

Rental price of industrial park land will increase when the demand for factory expansion increases sharply. Currently, big names in the electronics field such as Samsung, LG Display, Xiaomi, and Goertek also announced plans to expand, increase capital, or rent new factories to start production in Vietnam.

According to CBRE calculations, the supply of industrial land will increase by more than 14,000 hectares for both markets within the next three years. The second-tier industrial provinces will account for about 21% to 42% of the supply in the South and the North respectively. With positive demand, industrial land rental rates are expected to increase by 5-10% a year for the next three years in the Northern market and 8-13% a year in the South.

Ho Chi Minh City has the highest industrial land rental price in the country, approximately reaching $200 per square meter, while the average rent in key industrial capital provinces in the South reaches $135 per square meter rental cycle in the North, the average rent in the whole area is 109 USD per m2 per rental period, with Hanoi leading at 139.9 USD, according to Cushman & Wakefield.

Previously, Savills’ Vietnam Industry Highlights report in the first quarter also made a similar statement about the trend of maintaining the increase in rental prices of this type of real estate. The positive point is that industrial production in Vietnam has increased sharply compared to the same period last year. In addition, Savills assessed that Vietnam’s economic support policies and successful vaccination campaign have created a solid basis for foreign businesses to put their faith in the recovery.

Source: Cong Thuong