Build-to-suit mini workshops favored by foreign enterprises

Despite relatively high leasing fees, ready-made workshops are still being chosen by foreign investors, especially those from Japan and South Korea.

Build-to-suit mini workshops favored by foreign enterprises

Kizuna JV’s chair Doan Hong Dung said the mini workshops mostly fit small enterprises.

While most industrial zone (IZs) and export processing zone (EPZ) developers in HCMC and southern provinces prioritize leasing large-area premises (3,000 square meters at minimum), Kizuna JV leases small-scale ready-made workshops. 

The company utilizes new technology to design workshops to the orders specified by clients. There is no need to destroy walls to change workshops’ structure or remove supporting works. With this way of execution, its Kizuna 3 workshop area in Tan Kim commune of Can Giuoc district in Long An province can satisfy all requirements, even a small area of 80-100 square meters.

While most industrial zone (IZs) and export processing zone (EPZ) developers in HCMC and southern provinces prioritize leasing large-area premises (3,000 square meters at minimum), Kizuna JV leases small-scale ready-made workshops.

Japanese now occupy 45 percent of three Kizuna areas, and South Koreans 35 percent, while English speaking and domestic investors are leasing the remaining 20 percent.

The areas only attract investment in clean and green industries, including electronics, precise mechanics, high technology, fashion, cosmetics, healthcare and packaging.

The land rent in Kizuna is $4.4 per square meter on average, or $1 higher than the rent applied in other IZs. However, Dung affirmed that the high rent is justified.

Encouraged by initial achievements, Dung plans to build multi-story workshops and accept payment by installments to lure more investors.

Troy Griffiths, deputy CEO of Savills Vietnam, predicted a bright prospect for the IZ real estate market in Vietnam in the context of the FDI boom.

 

He said the increased number of foreign invested enterprises in Vietnam has led to increasingly high demand for specifically-built workshops that can satisfy specific requirements of investors and optimize the use.

That is why more and more build-to-suit IZ workshops, with different area levels from 500 to 2,500 square meters have appeared.

Most recently, the groundbreaking ceremony of the first multi-story workshop complex in Long An province, developed by Long Hau JSC took place in mid-March. The 6-storey 6,000 square meter workshop area is expected to be completed by November 2019.

The workshops of this kind are built flexibly as demanded by investors to meet standards and fit the uses of different production fields. As the workshops are ready made, it does not take investors much time to prepare before starting production.

Bnews cited a report as showing that Vietnam has 80,000 hectares of land to reserve for IZ development in the three major economic centers in the northern, central and southern regions.

The report says one of the reasons behind the strong rise of Vietnam IZ real estate is the lower production cost, less than $1 per hour, the lowest level in ASEAN and lower than China.

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