Industrial real estate still "facing difficulties"?

Industrial real estate still faces difficulties

According to the latest report of the Vietnam Association of Realtors (VARS), industrial real estate is considered one of the fastest growing segments of the market.

In recent years, with many investment and support policies from the Government, along with improved infrastructure and strategic position in the global supply chain,... industrial real estate has maintained its "star" position, attracting great attention from domestic and foreign investors.

However, according to many experts, the industrial real estate market is still facing many difficulties and needs more specific mechanisms to develop more strongly and focus more on attraction.

Real Estate - Industrial real estate still — Land fund for expanding industrial parks is a problem that worries many investors.

Mr. Nguyen Van Dinh, Chairman of VARS, assessed that Vietnam's industrial park market still has a lot of room for growth, promising to continue to maintain strong growth momentum with a key role in the economy.

Accordingly, the development of the logistics industry has increased strongly, especially when e-commerce exploded. Domestic and foreign logistics enterprises have also been actively expanding the scale and scope of operations in Vietnam.

However, the Vietnamese market still faces many challenges as some key markets such as Ho Chi Minh City, Binh Duong, and Dong Nai are facing difficulties in expanding industrial land funds due to rapid urbanization and land competition. Although infrastructure has improved, it has not yet met the development speed of industrial parks.

According to the chairman of VARS, the current difficulties include complicated policies and administrative procedures that are time-consuming and costly, causing difficulties for investors. Policies related to investment and development of industrial zones are sometimes inconsistent and change suddenly, making it difficult for investors to make long-term plans.

In addition, the shortage of highly skilled labor, limited environmental management, investment risks due to high land and construction costs, especially the cost of creating land funds when the new Land Law officially takes effect... further increase the difficulties for industrial real estate.

Mr. Phan Tan Dat, Chairman of the Board of Directors of Binh Duong Mineral and Construction Joint Stock Company (KSB), commented: “Currently, the global economic recession is showing signs of slowing down and economic development may gradually recover from 2024. Industrial real estate is considered a bright spot in the real estate segment, although the industrial real estate segment faces many difficulties in terms of some mechanisms and labor, but with the strategy and determination of investors, solving difficult problems will become easier.”

According to Mr. Dat, currently, investing in industrial parks and attracting customers is not easy. In addition to the policies of industrial park investors themselves, local authorities must also be an important “key” in attracting investors.

Green Industry Boom Keeps Investors Staying

In recent years, industrial real estate has always been a segment that foreign investors focus on.

Many industrial park "giants" have also quickly seized the opportunity by researching and developing modern industrial parks, applying high technology and automation and green production standards to improve productivity and product quality, while minimizing costs and increasing competitiveness in the international market.

For example, in Ho Chi Minh City, resources are currently being focused on developing and building high-tech zones, bringing green, environmentally friendly factories to one location, and at the same time applying many automated production lines and improving skills.

Or in Binh Duong province, in recent years, this province has been following the motto of standardizing industrial parks, aiming for a green and friendly environment. Initially, the industrial parks in cooperation with Singapore (Vsip Industrial Park) have made a strong impression with their well-organized infrastructure, safe industry and especially the industrial parks are always covered in green.

In just a few years, the model of green industrial park like Vsip has been developed by Binh Duong province from 1 to 3 industrial parks. This is also one of the bright spots attracting foreign investors to Binh Duong.

A representative of VSIP Group (a joint venture between Becamex IDC Corporation (Vietnam) and Sembcorp Development Singapore) shared: “Since the construction of the first industrial park in Binh Duong, this unit has aimed for a green industrial park according to international standards with systematic infrastructure, prioritizing green areas and ecological environment. Creating the most favorable and elite environment for investors to learn about and come to build factories to work, and this is the condition to help investors find and retain them.”

Mr. Pham Ngoc Thuan, General Director of Becamex IDC, said that for new industrial parks, the task of planning and calculating smart management solutions from the beginning, and the criteria for ecological industrial parks will also be specifically considered. This contributes to attracting high value-added, green and environmentally friendly industries, creating a premise for future science and technology industrial parks.

To further support the development of industrial real estate, VARS experts also proposed that the government should continue to promote investment and upgrade transport infrastructure, logistics, and industrial utilities to support the development of industrial parks.

In addition, it is necessary to continue reforming administrative procedures and creating a more favorable investment environment for businesses. Invest in education and vocational training, especially in the fields of high technology and automation, to improve the quality of human resources and take advantage of the remaining 15 years of the golden population period.

At the same time, strengthen attractive and stable incentive policies to attract foreign investment.

According to VARS data, by the end of the first quarter of 2024, the country had 418 industrial parks (including 4 export processing zones) established in 61/63 provinces and cities with a total natural land area of about 1,299 thousand hectares. The total industrial land area reached about 892 thousand hectares, including 371 industrial parks outside economic zones, 39 industrial parks located in coastal economic zones, and 8 industrial parks located in border economic zones.

Industrial parks and economic zones have attracted over 10,400 domestic investment projects and over 11,200 valid FDI projects, with total registered investment capital of over VND2.54 quadrillion and USD231 billion, respectively. FDI capital in industrial parks and economic zones accounts for about 35-40% of the total registered FDI capital increase of the whole country in recent years.

By 2023, industrial parks and economic zones nationwide have created jobs for about 4.15 million direct workers, mainly concentrated in the Southeast and Red River Delta regions, accounting for 41.3% and 30.3% of workers working in industrial parks nationwide, respectively.

Occupancy rates and rental prices maintained steady growth. Operating industrial parks have an estimated occupancy rate of over 75%. Of which, key southern provinces reached 92%.

High demand and an increasing trend have pushed up industrial park land rental prices, with a steady increase of 8-12% per year. The Southern region has an average rental price of 188 USD/m2/rental period.

Source: https://www.nguoiduatin.vn/bat-dong-san-cong-nghiep-van-gap-kho-a665592.html