According to a recently released report by market research firm CBRE Vietnam, industrial real estate continues to record positive numbers. In the Northern region, the average occupancy rate of industrial parks in the tier 1 market reached 80.2% in the third quarter.
Industrial land absorption in tier 1 markets reached 251ha in the quarter. In the first 9 months of the year, the absorption rate reached more than 700ha, 18% higher than the absorption rate of the whole year 2022.
Industrial land rental prices continued to increase. In the third quarter, the average rental price for the Tier 1 market reached USD 131/m2/remaining term, up 2% quarter-on-quarter and 12% year-on-year.
In the Southern industrial market, the average occupancy rate in industrial parks reached 81.9%. The absorption rate of industrial land reached more than 190 hectares, an increase of 5.9% over the previous quarter, with a total of more than 770 hectares in the first 9 months of 2023, nearly equal to the absorption rate of the whole year of 2022.
In terms of rental prices, the average industrial land rental price in tier 1 markets reached 189 USD/m2/remaining term, continuing to increase slightly by 1% compared to the previous quarter and 13% higher than the same period last year.
Major deals came from Chinese and Japanese businesses across a wide range of industries including mechanical engineering, chemicals, plastics, rubber, and electronics.
In the warehouse and ready-built factory segment, in the first 9 months of the year, the Northern market had 752,000 m2, and the Southern market had 450,000 m2 newly put into operation.
For the Northern market, the average warehouse rental price was at USD 4.6/m2/month and the factory rental price was USD 4.8/m2/month. Manufacturing companies in the electronic components and auto parts industries were the main customers with demand for new factory space in the last quarter. The main transactions still came from markets with large supply sources such as Bac Ninh and Hai Phong.
In the Southern market, with abundant new supply, warehouse and ready-built factory rental prices are relatively stable, with average rental prices reaching 4.5 USD/m2/month for warehouses and 4.9 USD/m2/month for factories. The occupancy rate of ready-built warehouses reached 56%, while that of ready-built factories has always been maintained at a good level, reaching 91%.
Tenants from China, Vietnam, Japan, the US and the European Union are active investors looking for industrial land and warehouses in the Vietnamese market.
Ms. Nguyen Hoai An, Senior Director of CBRE Vietnam, said that in the next two years, industrial land rental prices are expected to increase at the rate of 6-10%/year in the Northern region and 4-8%/year in the Southern region. Positive demand from many industries and many nationalities of tenants will help boost rental growth in many localities.
Meanwhile, rental prices for ready-built warehouses are expected to increase slightly by 2-4% per year in the next two years, as new projects with good technical specifications and convenient locations will have rental prices higher than the market average.
With Vietnam upgrading its cooperative relations to a comprehensive strategic level with major partners such as the US, South Korea, and China, investment flows from these countries are expected to continue to lead the demand for industrial real estate in the coming time.
“The market will continue to have many changes in the coming time, with expectations of growth in foreign direct investment (FDI), the shift and diversification of industries of FDI enterprises, especially in the direction of high technology content,” Ms. An assessed.
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