The supply of industrial land in the north

Deep C, an industrial complex in the northern province of Hai Phong, receives frequent questions about land rent. Hans Kerstens, an international business development manager, estimated that the number of businesses showing interest in leasing land in Deep C in 2018 was double the year before.

Besides South Korea and Japan, Deep C has also received businesses from China, the US and Europe.

The demand for industrial land has been increasing in recent years as multinational corporations follow the China+1 strategy to minimize risks. When production capacity increases, they set up production facilities in a non-China market, especially in Southeast Asia. And Vietnam is a frequent choice.

“The trade tension between the US and China has accelerated the implementation of the China+1 strategy,” Kersten said.

Henry Chin from CBRE, a real estate service provider, also thinks that many manufacturing companies will leave China for either their home countries or Southeast Asian countries.

Not only IZs, but offices for rent and shopping malls benefit from the trade war. Once bigger FDI in the manufacturing sector flows to Vietnam, the demand for houses, offices and premises for entertainment will increase.

Regarding the trade war, Washington and Beijing are making every effort to reach a consensus prior to March 1. If no agreement is reached, the US will raise the tariff on $200 billion worth of goods from China from 10 percent to 25 percent as initially planned.

The trade war has had an impact on the global economic growth, production activities and business confidence. While many enterprises are still watching the situation, many others are seeking alternative markets to avoid risks.

“In the short term, we see a significant increase in the number of companies seeking to allocate production bases to Vietnam,” Kerstens said.

“In the long term, things will depend on how the US-China trade war goes,” he said, adding that it is also necessary to consider the openness of the Vietnamese market through free trade agreements and Vietnam’s capability in infrastructure development.

According to MPI, Vietnam has 325 IZs with the total land area of 95,000 hectares, of which 53 percent had been occupied by June 2018. These include 231 operational IZs and 94 under construction.

Troy Griffiths, vice director of Savills Vietnam, noted that the demand for industrial property in Vietnam was exceeding supply in IZs, with the occupancy rate 73 percent.

New investors have appeared in the industrial property market. BWID, for example, has developed 209 hectares of industrial property in eight IZs in five major cities.

RELATED NEWS

Industrial property 2019: the ball’s in Vietnamese court

IZ land heats up, investors sell land for profits