Demand for industrial land for rent remains high

HCM City - The demand for industrial land for rent in Vietnam will remain high this year thanks to policies promoting investment in the country, experts said.

Due to short supply, rental prices for industrial land are expected to continue to rise by an average of 8-20% year-on-year in 2023, depending on the region, according to a report by the SSI Securities Corporation.

Last year, industrial real estate rents rose by an average of 10% due to high demand, according to the report.

Trang Minh Ha, chairman of the North Stars Asia Company, said that in Vietnam, industrial real estate leasing has seen a hike in demand and rental prices, especially for logistics and warehousing.

The industrial land-for-rent market is likely to remain strong over the next 12 months, she added.

Demand for industrial land has surged as the occupancy rate in industrial hubs has reached almost 100%, she said.

Many ready-built warehouses, factories and logistics and data centres are being built in industrial parks (IPs) across the nation, she added.

The average rent for industrial land in the southern region was 159 USD per square metre in the last quarter of 2022, up 3% over the previous quarter and 10% year-on-year, according to global real estate services firm Cushman and Wakefield.

The highest rent in Ho Chi Minh City was 300 USD per sqm. The occupancy rate increased to 92% from 91%. The average rent in Binh Duong and Long An provinces was 180 USD.

According to the Ministry of Planning and Investment, Vietnam has 292 industrial parks with a total land area of 87,100ha and 106 more are under construction.

They are home to some 10,000 domestic companies and 11,000 foreign-owned firms that have invested over 340 billion USD.

Vietnam continues to be an appealing destination for industrial real estate investors, according to Cushman and Wakefield.

The firm attributed this to the country’s stable growth rate, an export-oriented economy, a young labour force, investment incentives, a strategic location and a positive economic outlook.

Opportunities from the soaring demand for e-commerce and industrial production have prompted businesses to aggressively hunt for large-scale warehousing projects in critical locations and adjacent to major economic centres, especially with land increasingly scarce.

Thanks to an improved manufacturing industry and border reopening, the flock of foreign investors has led rental prices of industrial land to set a new record.

Many localities such as Dong Nai, Danang, and Quang Ninh face aggravation in reaching foreign-invested capital attraction targets for the whole year due to a lack of land.