A view of the Dinh Vu Industrial Park in Hai Phong city. (Photo: VNA)Accordingto SSI Securities Inc., public investment in improving the infrastructureconnecting industrial parks is promoting recovery of demandof rented land in the industrial parks.
Infrastructureprojects that will create convenient traffic connecting industrial parksinclude the expressway projects of Bien Hoa - Vung Tau, Dau Giay - PhanThiet, North - South, Thi Vai - Cai Mep port and Gemalink port.
Cushman andWakefield, a leading global real estate services firm, reported Vietnamcontinues to be an attractive destination for industrial real estate investorsdue to a stable growth rate, an export-oriented economy, an increase in freetrade agreements, a young workforce, preferential investment policies andstrategic location.
Withfavourable government incentives, competitive labour costs, a stable politicalenvironment, a positive economic outlook and free trade agreements, Vietnam hasalso become favoured by foreign investors moving out of other countries.
To seize thisopportunity, in early 2022, information about the expansion of the land fundhas been announced by listed companies.
IDICOCorporation - JSC (IDC) has targeted to complete the entire site clearance atthe Huu Thanh Industrial Park in Long An province this year.The industrial park has completed site clearance of over 91 percent of thetotal area with 150 hectares ready for lease.
In addition,high land rent in industrial parks will also aid the growthof industrial park real estate enterprises in the future.
The SonadeziChau Duc Shareholding Company witnessed a sharp increase in net profit inthe fourth quarter of 2021 thanks to the impressive increase in rental landarea and rents.
Its revenueincreased by 108.9 percent year-on-year to 147.7 billion VND, mostly fromindustrial park land rental. Its gross profit margin increased by 24.1percentage points to 64 percent thanks to a 10-15 percent surge in land rent inthe Chau Duc Industrial Park. As a result, the fourth quarter's net profitjumped 186.7 percent year-on-year to 68.1 billion VND.
With anincrease of 5 percent per year in the basic land prices applied in Binh Duongthis year, more enterprises expect positive business performance.
According toSSI, the Investment and Industrial Development Corporation can achieve a profitgrowth rate at higher than 43 percent from 2022 because it owns a commercialland area of 648 hectares in Binh Duong new city and residential areas in Bau Bangand My Phuoc.
In addition,the company also owns 590 hectares of available space for lease inindustrial parks.
Meanwhile,Investment and Industrial Development Corporation large joint ventures such asVSIP (it holds 49 percent) and Warburg Pincus (it holds 30 percent) areforecast to have growth in profits due to recovery in demand forleasing land and facilities from this year.
The SSIreported that in 2021, the stock value of the listed industrial park realestate companies increased by 62 percent, especially the companies with smalland medium capitalisation.
Industrialmarket 2021
In 2021, the Vietnamindustrial market was challenged by two waves of COVID-19 in key industrialregions in both the Northern and Southern regions. The supply chain was temporarilydisrupted in the third quarter due to various COVID-19 prevention measures.
The Governmenthas provided strong support helping the industrial market to maintain overallpositive performance and recover quickly when the COVID-19 prevention measuresloosened in the fourth quarter of 2021, according to CBRE Vietnam.
In the fourthquarter, average occupancy rates of existing industrial parks in five keyNorthern industrial cities and provinces (Hanoi, Bac Ninh, Hung Yen, Hai Duongand Hai Phong) reached 79.3 percent, up by 3.6 percentage points year on year.Similarly, the occupancy rate of four key Southern industrial cities andprovinces reached 87.3 percent, up by 0.11 percentage points year on year.
Regarding thetransactions recorded by CBRE in 2021, the sizes of land lease transactionsranged between 3ha to 40ha, with land sizes commonly ranging between 3haand 5ha. Big transactions with land sizes of 20-40ha were recorded from tenantsin the logistics, electronics, and toy manufacturing industries.
In terms ofindustry, logistics and electronics were active with various transactions inboth the Northern and Southern regions of Vietnam.
In addition,packaging and solar energy industries in the North, as well as furniture andmedical equipment in the South were emerging with an increasing number of dealsdone.
Due toimproving occupancy rates, average asking rents were stable in major industrialcities and provinces despite COVID-19. Industrial parks within a 1-hourtravelling radius from HCM City and Hanoi increased asking rents by 15-32 percent.
With solidleasing demand resulting from the shifting supply chain and the infrastructureimprovement (Trung Luong – My Thuan, Dau Giay – Phan Thiet in the South; Van Don– Mong Cai expressway, Ninh Binh – Hai Phong in the North), the industrialmarket recorded expansion and entrance of new developers.
Foreigndevelopers expanded their portfolios by acquiring land and assets, a jointventure with local developers. On the other hand, strong local developers cannegotiate and acquire land directly from the Government.
Performance ofwarehouses and ready-built factories remained stable. In the newwarehouse/ready-built factory hubs, asking rents increased 5-17 percent,primarily due to better specifications.
In 2022 and2023, industrial land supply is expected to increase by over 7,000 ha for bothNorthern and Southern regions.
Average askingrents are anticipated to achieve an annual growth rate of 4 percent in bothregions due to stronger supply./.
VNA
