INDUSTRIAL REAL ESTATE CONTINUES TO GROW - OTIS LAWYERS

In recent times, industrial real estate has demonstrated its potential through stable development amid the Covid-19 pandemic and significant growth in the post-pandemic recovery phase. According to a report by CBRE Vietnam, in the first quarter of 2024, industrial real estate maintained its leading position in the Vietnamese real estate market, despite the current economic difficulties and challenges.

This sector has attracted many large projects, particularly in the energy sector, focusing on projects involving battery production, photovoltaic cells, silicon rods, components, electronic products, and high-value-added products. Among these, several projects have received investment registration certificates, such as BoViet Hải Dương's $120 million project, Trina Solar Cell's $454 million project in Thái Nguyên, and Gokin Solar Hải Hà Vietnam's $275 million project in Quảng Ninh.

Expected Rent Increase: 3-9% Per Year

The CBRE report noted that industrial land rents in tier-1 markets in the North, such as Hanoi, Hải Phòng, Bắc Ninh, Hưng Yên, and Hải Dương, increased by 7.8% in the first quarter of this year compared to the same period last year, reaching an average of $133 per square meter with an occupancy rate of 83%. In the South, industrial land rents in some markets like Ho Chi Minh City, Bình Dương, Đồng Nai, and Long An also increased by 2.4% compared to the previous year, reaching $189 per square meter (approximately 4.7 million VND per square meter) with a stable occupancy rate of 92%.

Besides traditional tier-1 markets, both domestic and international enterprises are tending to expand to potential tier-2 markets such as Tây Ninh and Bà Rịa - Vũng Tàu, where industrial land is abundant and rental prices are competitive. Future projections indicate that the demand for warehouse and industrial land leases will continue to rise while supply remains somewhat limited.

CBRE predicts that over the next three years, industrial land rents are expected to increase by 3-9% per year in the North and 3-7% per year in the South. Rent for warehouses and ready-built factories will also see a slight increase of 1-4% per year.

Transforming Industrial Zones to Increase Investment Appeal

Many experts believe that efforts to enhance the attractiveness of the investment environment, along with important geographical and political factors, have helped Vietnam increase its FDI attraction. This is also a significant reason why industrial real estate remains a leading sector amidst a bleak real estate market and economic recession. However, to attract sustainable FDI, experts suggest that the investment environment needs comprehensive improvement, particularly in industrial zones, which need to actively innovate to meet modern production requirements.

Vietnam is one of seven countries participating in the Global Eco-Industrial Parks Programme. This helps Vietnam aim for economic growth while ensuring social welfare, environmental protection, and ecosystem conservation. Industrial zones and export processing zones are encouraged to develop according to a circular, low-emission model.

Many localities have considered eco-industrial zones an inevitable development trend, integrating sustainable industrial zone development into their socio-economic development strategies and plans. The industrial zones themselves are also proactively implementing energy-saving solutions, reducing emissions, attracting high-tech industries, and modern production lines.

In the process of gradually transforming into eco-industrial zones, various measures have been applied by the Phước Đông Industrial Zone's investor, such as installing rooftop solar power systems, selecting investors that meet environmental protection criteria, encouraging businesses within the zone to use resources efficiently and save resources, use recycled materials, and invest in modern, fuel-efficient machinery.

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