Industrial property 2019: the ball’s in Vietnamese court

VietNamNet Bridge - Analysts believe that 2019 will be the year of industrial property, with a new infusion of FDI inflow.

VietNamNet Bridge - Analysts believe that 2019 will be the year of industrial property, with a new infusion of FDI inflow.

2019 will be the year of industrial property

“The movement of relocating production bases out of China, which began in 2015, has been escalating recently because of the US-China trade war. Vietnam will benefit from the movement thanks to its strategic position in Asia and the border line with China,” according to a report from Rong Viet Securities.

Troy Griffiths from Savills Vietnam also said that the trade war has brought great opportunities to Vietnam to receive a new wave of investments in industry. He believes that the occupancy rate in IZs and the land rent will progress in 2019.

According to JLL Vietnam, the eastern part of the southern region is the fastest growing industrial property market of the country with only 25 percent of land unoccupied in the area.

Meanwhile, the northern industrial property market is predicted to see bigger changes as it It is near China, which is more favorable for the workshop relocation. Hai Phong, Quang Ninh and possibly Bac Ninh, Bac Giang and Hung Yen may become the new destinations for investors.

The movement of relocating production bases out of China, which began in 2015, has been escalating recently because of the US-China trade war. Vietnam will benefit from the movement thanks to its strategic position in Asia and the border line with China.

Rong Viet Securities predicted that Kinh Bac Urban Development and Viglacera in the north, and Long Hau IZ JSC and Nam Tan Uyen IZ in the south would see the biggest benefits.

Kinh Bac now has 843 hectares of land for lease in Bac Ninh, Bac Giang and Hai Phong, where the demand is always high, while Viglacera now owns 911 hectares.

However, IZ developers have been warned that the conditions will be not favorable for them.

One of the biggest problems for developers is site clearance, the cost of which accounts for 40-55 percent of total investment costs.

Long Hau 3 IZ developer may not place 90 hectares of land into lease soon despite the advantageous position and high demand because of difficulties in site clearance.

The Nam Tan Uyen 3 IZ, covering an area of 255 hectares, officially got a license in September 2018. Analysts believe that the IZ would be the major driving force for the company’s development in the next five years.

The bright prospects have helped the prices of Nam Tan Uyen shares increase by 50 percent since last August.

Some analysts have warned of the risks that IZ developers may face once the trade war cools and foreign investors cancel their plans to relocate to Vietnam.

The land rent at Giang Dien IZ in Dong Nai province has risen to $90 per square meter from $70 last year.