The Vietnamese stock index has been increasing steadily since the beginning of the year. Industrial real estate shares saw bustling trading sessions following an eventful 2023 when the prices increased. 

FDI (foreign direct investment) in 2023 also witnessed a significant increase. Vietnam's industrial park real estate market has the brightest prospects ever in the US and China. 

The establishment of the Vietnam-US comprehensive strategic partnership in September 2023 and the plan to build the Vietnam-China ‘community with shared future for mankind’ both promise great opportunities for Vietnam to develop its economy. 

In the latest report, SSI said that the demand for industrial land rent will be high in 2024. The demand for land rent in IZs in northern provinces is expected to increase sharply thanks to the trend of moving manufacturing bases from China to Vietnam, mostly in the electronics and semiconductor industries.

CBRE reported that as of September 2023, Apple had 11 audio equipment manufacturing facilities in Vietnam, while Apple’s vendors, such as Lux Share, Foxconn, Compal and GoTek, are running 32 factories in Vietnam. 

Meanwhile, southern industrial zones (IZs) are believed to see a strong recovery with tenants in textile and garment, woodwork, footwear, logistics, food and beverage industries. SSI said many IZ developers signed MOUs on leading industrial land with new clients in the second half of 2023. 

The MOUs are likely to turn into official contracts and bring revenue in 2024. Opportunities from agreements with China are visible after Chinese Xi Jinping's visit to Vietnam in late 2023. 

One of the main points mentioned during the visit was Chinese investment in Vietnam. China wants to make outward investment under the framework of the global infrastructure initiative. 

Vietnam’s enterprises recently have been trying to attract Chinese enterprises to make investment in domestic IZs. In September 2023, Hanaka, Videc, Phuc Loc and other corporations attended a conference in Shenzhen to promote trade and investment between Vietnam's large IZs and Chinese enterprises. 

Meanwhile, the Vietnam-US comprehensive strategic partnership is expected to bring great opportunities. Pursuing the strategy on relocating production out of China, the US is eyeing Vietnam as a suitable destination for organizing production in the fields of semiconductors, minerals for the semiconductor industry, digital infrastructure, energy, infrastructure and logistics. 

Industrial real estate 

Analysts say that while there are great opportunities to attract foreign investors, the supply of industrial real estate (land and ready-built workshops) is limited. This paves the way for IZ developers to make money. 

Kinh Bac Urban Area Development (KBC) owned by Dang Thanh Tam, a well known businessman, is one of the biggest beneficiaries of the investment wave. The IZ developer in 2023 cleared all bond debts, while it expanded its land bank to attract foreign investment. 

KBC also bought more land plots in the north in anticipation of FDI waves from South Korea and China. In late 2023, KBC’s 1/2000 Trang Due 3 IZ design in Hai Phong got approval. In the south, KBC is pouring more money into the IZs in Hau Giang with total investment capital of VND5.5 trillion. 

The high demand for industrial real estate has helped IZ developers’ share prices increase. Like KBC, Sonadezi Chau Duc (SZC), Idico and Viglacera also saw their share prices increase sharply last year and the upward trend is expected to continue in 2024. 

According to SSI, with the limited supply of industrial land, the land rents in listed IZs will increase by 15.5 percent in 2024. The supply will still be modest because of the problems in land assessment, land auctioning for shifting agricultural into industrial land and in site clearance. 

New IZs will only become operational 2-5 years after the projects get the PM’s approval. According to Bloomberg, the gap in IZ land rents between Vietnam and Southeast Asian countries has been narrowed, but the rent in Vietnam is still 21 percent lower than the average rent in Indonesia. 

A report found that the profits listed industrial real estate firms expect in 2024 may increase by 9.3 percent this year. 

Manh Ha