Promoting the advantage of "coming later and getting ahead"
With the advantage of being ahead and the advantage of attracting investment, up to now, in the "locomotives" of industrial development such as Ho Chi Minh City, Hanoi or the southern provinces of Binh Duong, Dong Nai, the northern provinces of Hai Duong, Bac Ninh, Bac Giang ..., the area of industrial parks (IPs) has basically been filled and developed stably. That means that there is not much land left for industrial development. In the current context, expanding the area of IPs is not easy and the demand for land rental is still high, so the land rental price is constantly increasing.
A business that came to Nghe An to rent land to do business in an industrial park said: Because the land fund in the northern industrial parks has run out, in recent years, land rental prices have increased rapidly, from about 90-100 USD/m2/year previously, it has increased on average to 150 USD, and at times even up to 180 USD/m2/year.
While industrial centers have run out of space and high rental prices, in Nghe An in particular and the North Central provinces in general, due to the remaining space and not too high rental prices, it is a feasible choice for investors. Specifically, in Nghe An, according to information from industrial park infrastructure businesses, depending on the contract, area, and rental period, there are different prices, but in general, it is still cheaper than other key industrial areas. Through the survey, we learned that land rental prices in Nghe An industrial parks are currently commonly from 48 to 100 USD/m2/year.
The Ho Chi Minh City Business Association, during a working trip with Nghe An province, shared: Recently, due to the limited space and land fund for industrial development, instead of receiving and attracting all projects as before, large industrial centers such as Ho Chi Minh City have to choose, only prioritizing attracting projects with modern equipment and technology and discouraging projects using large land funds, especially projects with technology that have a great impact on the environment.
The limitations of the above localities are also opportunities for localities like Nghe An. If cooperative relationships are established, localities can completely share information, connect and cooperate, and attract investment in suitable projects. Similarly, the Business Association and the Hanoi Investment, Trade and Tourism Promotion Center also continuously have association and connection activities to attract investment to Nghe An.
Although land rental price is not a decisive factor in investment or not, recently, with the establishment of a separate land price list for industrial parks and attracting professional infrastructure investors, Nghe An has created a competitive advantage to attract investment in industrial parks compared to other provinces. Specifically, in the past 10 years, since attracting WHA, VSIP, Hoang Thinh Dat, with synchronous investment infrastructure, Nghe An has emerged as a choice for FDI investors every time they come to Vietnam to survey and seek investment opportunities.
On the side of investors in industrial park infrastructure, they also assessed that thanks to the new land price list specifically for industrial parks which is calculated more reasonably, infrastructure investment enterprises are more proactive in negotiating rental prices with secondary investors; at the same time, it is the basis for considering the decision to expand investment in the next phase.
With the above advantages and the province's efforts to attract investment, in the past 2 years, despite being heavily affected by the Covid-19 pandemic, Nghe An has still made a big change in attracting investment. In 2022, for the first time Nghe An entered the top 10 localities attracting the largest foreign direct investment (FDI) in the country with a total newly granted and adjusted capital of 961.3 million USD. In the first 8 months of 2023, Nghe An continued to lead the 14 provinces and cities in the North Central and South Central Coast regions, ranking 8th in the country by attracting 9 foreign direct investment projects with a registered capital of 890 million USD.
Opportunity for Nghe An industrial real estate to accelerate?
According to experts, the industrial real estate market in a locality is considered to be synchronous and complete if it includes the land area segment in industrial parks and industrial clusters. Industrial parks have higher rental prices and are for large-scale enterprises; while industrial clusters have lower rental prices and are for small and medium-sized enterprises; regardless of the type of enterprise, whether FDI or domestic.
One of the advantages for businesses and investors when entering an industrial park or industrial cluster to do business and production is that there is a complete technical infrastructure, including roads, power supply, fire prevention system, wastewater treatment system... designed and invested synchronously, businesses only need to install factories and equipment lines to focus on production and business, with little need to worry about other issues. When problems arise, there are investors in leasing infrastructure, the Management Board of the Southeast Economic Zone and departments, branches and localities to support...
However, the high land rental price in industrial parks is a major barrier for domestic enterprises, most of which are small and medium-sized. Therefore, instead of renting land in industrial parks for investment and business, domestic enterprises often mobilize land acquisition, compensation and site clearance.
A representative of a business investing in production premises in Nghi Lam commune, Nghi Loc district said: Implementing this plan, businesses initially have to spend a large amount of money to compensate and clear the land, but in the long run, it reduces the annual land rental cost which is quite high. In fact, although the rental price is lower than some key industrial parks nationwide, with the current price, mainly only FDI enterprises dare to rent land in industrial parks invested by VSIP, WHA or Hoang Thinh Dat. Domestic enterprises with over 95% of small and medium scale still have difficulty accessing production and business premises; others have to re-rent areas in industrial parks or small industrial clusters invested by the State... This, in the long run, can cause consequences for the environment, wastewater or lack of electricity supply.
The above reality shows that, to perfect the industrial real estate market, on the one hand, Nghe An needs to attract investment in developing infrastructure of industrial parks so that large-scale projects can lease land, and at the same time, it must plan and increase land funds to develop small industrial clusters, creating conditions for small and medium-sized enterprises to access and lease land for production and business.
In addition, it is necessary to strengthen inspection and effective handling of suspended projects or projects that allocate land but do not put it into use; limit the situation of "hanging fat, starving cats" when investors rent land to enjoy incentives from the State but do not invest in infrastructure or rent land, enjoy preferential prices but do not install factories for production and business but to sublease...
From now until 2025, the land fund for Nghe An real estate market will have an additional 1,500 hectares, of which 1,200 hectares are in industrial parks and about 300 hectares in industrial clusters. With positive signals of attracting investment, especially FDI investment, in the coming time, Nghe An will upgrade key connecting infrastructure, and actively invest in other social infrastructure, the opportunities for Nghe An industrial real estate market are increasingly greater.
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