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Industrial zones’ brilliant days return

Industrial zone (IZ) development is expected to be one of the three most profitable real estate segments this year.

Industrial zone (IZ) development is expected to be one of the three most profitable real estate segments this year.

After a long period of sinking like a stone, Kinh Bac Urban Development JSC’s shares have gone up. 

The industrial zone development company, owned by Dang Thanh Tam, the richest Vietnamese stock millionaire in 2007, has made profits again after years of taking losses. 

In 2014, Kinh Bac reported revenue of VND1.213 trillion, equal to that of 2013, while post-tax profits increased sharply by 297 percent, reaching VND326 billion. 

Kinh Bac’s prosperity in 2014 was due to several big tenants. LG Group, for example, has signed a contract to lease 40 hectares more of land in the Kinh Bac-developed Trang Due IZ. 

This is the largest foreign-invested project in Hai Phong City, with expected capital of $1.5 billion.

Another 10 hectares of land in Trang Due has been leased to South Korean Haeng Sung, an electronics manufacturer. 

According to Kinh Bac, the company is gearing up for implementation of the project so as to get clean land to lease to the electronics manufacturers which make components for LG and others.

Tan Phu Trung, a Kinh Bac IZ in the south, also had a prosperous year in 2014. About 22.5 hectares of land in the IZ were leased in the year. 

Meanwhile, a group of Thai businesses said in the first quarter of 2015 that they planned to lease about 20 hectares there.

Dang Thanh Tam’s Kinh Bac is not the only profitable IZ developer.

Analysts said they can see a new “gust of wind” in the industrial zone development sector. 

Long Hau, Tan Tao Group, Sonadezi Long Thanh and Vinh Phuc Infrastructure Development all have reported satisfactory business results.

The analysts believe that IZ development, together with middle- and high-class apartments and resort real estate, will be the three most profitable business segments in 2015.

Timothy Horton, CEO of Cushman & Wakefield, noted that new foreign direct investment (FDI) was heading for Vietnam as foreign investors are leaving China. This is the reason behind the recent prosperity of IZ development firms.

The CEO said many companies and multinational groups with annual profit growth rate of 30 percent and higher have asked for Cushman & Wakefield’s consultancy on whether to buy 10,000-15,000 square meter land plots in IZs.

According to the Ministry of Planning and Investment, foreign investors registered $20.23 billion worth of investments in Vietnam in 2014. 

Unlike the years before, when FDI capital mostly flowed to the real estate sector, the registered projects were mostly in the manufacturing sector, explaining the increased demand for land in IZs.



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