Rents increase, ready-built factories are still popular

The industry group with increased rental demand for warehouses and ready-built factories in the South comes from high-tech companies, renewable energy and e-commerce.

According to CBRE Vietnam’s real estate market report for the first 6 months of the year, positive development in the industrial park real estate market continue to be recorded.

Notably, the demand for renting warehouses and ready-built factories from manufacturers in the North and the South increased in the first half of this year.

Demand for renting warehouses and ready-built factories is increasing

For the warehouses and ready-built factories market in the North, in the first half of 2024, there will be more than 225,000m2 of warehouses and ready-built factories completed in level 1 markets (Hanoi, Hai Phong, Bac Ninh, Hung Yen, Hai Duong). Of which, warehouses and ready-built factories area accounts for 95%.

The absorption area of the ready-built factories is also outstanding and is more than four times higher than the absorption area of the warehouses.

By the end of the second quarter of 2024, the occupancy rate of ready-built factories reached 89%, while warehouses in the Northern region maintained an occupancy threshold of 79%.

The rental price for ready-built factories reached 4.9 USD/m2/month, up 2% over the previous year, and ready-built warehouses reached 4.6 USD/m2/month, down 1% year-on -year.

Groups of companies in the electronics, semiconductor, furniture, and logistics industries are the tenants driving the demand for renting ready-built factories and warehouses in the North in the first halft of this year.

After a period of strong growth, the ready-built warehouse market in the South has no new supply. In the first six months of 2024, the occupancy reate reached 63% thanks to large transactions recorded at projects in HCM and Long An.

In contrast, the ready-built factory market had exciting developments when large-scale projects with a total area of more than 371.000m2 in Binh Duong and Dong Nai came into operation in the first six months of this year. Due to strong supply growth, the occupancy rate compared to the previous quarter reached 81%.

Warehouses and ready-built factories rental prices in the Southern market remained stable compared to the previous quarter, reaching 4.5 and 4.9 USD/m2/month, respectively. With a growth rate of 2% over the same period last year for warehouses, and 1% for factories.

The demand for ready-built warehouses in the South comes from manufacturers in the high-tech and renewable energy sectors, in addition to the expansion of companies in the e-commerce sector.

Opportunity when manufacturers expand factories

For the industrial land market, industrial land prices in tier 1 markets in the North increased slightly by 0.3% over the previous quarter and 4.5% over the same period. Reaching an average threshold of 134 USD/m2/remaining term.

For the Southern region, industrial land prices in tier 1 southern markets remain at 173 USD/m2/remaining term. Stable compared to the previous quarter and increased 1% over the same period last year.

The absorption area in the first six months of 2024 reached more than 220 hectares, helping the occupancy rate in the Northern region maintain at 83%. Manufacturers in the electronics sector continue to lead the Northern market, with large transactions coming from Victory Giant or Foxconn in Bac Ninh.

In the Southern market, the occupancy rate is stable at 89% and the absorption area reaches more than 259 hectares in the first six months of 2024. Manufacturers tend to expand to markets such as Long An and Ba Ria-Vung Tau (where industrial land fund is still relatively abundant with more competitive rental prices compared to other tier 1 markets such as Ho Chi Minh City, Dong Nai, Binh Duong).

According to CBRE, in the first six months of 2024, FDI disbursement into Vietnam reached 10.8 billion USD, the highest in the past 5 years. Along with that, a series of large factories in the two regions started construction, notably the Pandora factory (Binh Duong), Suntory Pepsico factory (Long An) or SK factory (Hai Phong), continuing to see positive signs of industrial real estate.