The FDI flow is expected to trigger a new wave of investment into industrial real estate sector

According to JLL, the total supply of industrial land for leasing in southern industrial zones (IZs) had reached 37,030 hectares by the end of June. 

This included 4,206 hectares of land in HCMC, and 9,813 hectares in Dong Nai (85 percent). 

Binh Duong is the province with the largest IZ area, 10,931 hectares, and the occupancy rate is 88 percent. The figures are 1,305 hectares and 85 percent, respectively, for Binh Phuoc.

Besides the cheap labor cost in Vietnam, which is half of China’s, the reasonable rent is also attracts foreign investors. 

The rent per one square meter in Vietnam is much lower than in Guangzhou (China), Bangkok (Thailand) and Jakarta (Indonesia). 

In addition, Vietnam imposes the lowest corporate income tax rate in Southeast Asia, at 20 percent.

Regarding the land rent, by the second quarter of 2018, the land rent in the southern key economic zone had increased by 4.7 percent compared with the fourth quarter of 2017, while it had risen by $7 per square meter in HCMC.

In early 2018, the market saw sale and leasing transactions at VSIP Park with a profitability rate of up to 10.7 percent per annum, much higher than that of office leasing, which is at 5-6 percent per annum.

Also, according to JLL, over 11,940 hectares of industrial land will join the southern market in the next three years. This means great opportunities for both existing and potential investors to join the industrial real estate market

In Hiep Phuoc IZ (Nha Be) and Tan Thuan Export Processing Zone (district 7), investors are rushing to build multi-story workshops to lease to enterprises. 

In Linh Trung EPZ, according to deputy director Tran Thien Trung, the EPZ is following necessary procedures to build a multi-story workshop area in 2018.

To attract enterprises, IZs and EPZs offer incentives and provide additional services, such as helping enterprises apply for business certificates, follow administration procedures and giving advices on worker recruitment. 

In Hiep Phuoc IZ, a specific area has been reserved for manufacturers from Japan and an area for enterprises in supporting industries.

However, not all IZs can catch the eyes of manufacturers. Foreign investors only choose IZs with good infrastructure, especially electricity and water supply.

According to Bui Nguyen Huyen Trang from JLL, besides the investment incentives offered by the State, foreign investors also consider other factors, including the network of material suppliers and licensing procedures. 

If the infrastructure is not good, foreign investors will not care about the investment incentives.

RELATED NEWS

Vietnam plans to prioritize ecological IZ development