The rental prices for industrial land in Vietnam are expected to increase by 6-10% over the next 2 years
The CBRE Vietnam report forecasts that in the next 2 years, industrial land rental prices are expected to increase by 6-10% annually in both the Northern and Southern regions.
The CBRE Vietnam report forecasts that in the next 2 years, industrial land rental prices are expected to increase by 6-10% annually in both the Northern and Southern regions.
Positive demand from various industries and nationalities is driving rental price growth in many areas. Meanwhile, the rental prices for ready-built warehouses are expected to increase slightly by 2%-4% annually over the next two years.
In the first 9 months of this year, tenants from China, Vietnam, Japan, the United States, and the European Union have been actively seeking industrial land and warehouses in the Vietnamese market. These tenants account for approximately 70-80% of the total inquiries received by CBRE in both the Northern and Southern regions.
With Vietnam strengthening its comprehensive cooperation with strategic partners such as the United States, South Korea, and China in recent times, tenants from these countries are expected to continue leading the demand in the Vietnamese industrial real estate market.
Pham Ngoc Thien Thanh, Head of Research and Consultancy at CBRE Vietnam, shared that the absorption area of the entire market this year is expected to be higher than the previous year, indicating the recovery of demand. CBRE has observed particularly positive activity in the industrial land and warehouse segments, with diverse demand sources. The main demand for ready-built warehouses comes from various sectors such as textiles, pharmaceuticals, and electronics.
CBRE representatives also believe that warehouse rental demand has shown an impressive recovery compared to the previous quarter, with large transactions coming from logistics companies. Looking to the future, sustainable development and high technology trends continue to attract the attention of investors and businesses. Green criteria are gradually becoming one of the important criteria for the development of factories and warehouses, driving the development of green industrial parks in the future.
CBRE’s data reveals that in the third quarter, in the Southern industrial market, the average occupancy rate in medium-sized industrial parks reached 81.9%. The absorption rate of industrial land exceeded 190 hectares, increasing by 6% compared to the previous quarter. In the first 9 months, it reached over 770 hectares, which is 20% higher than the entire year of 2022.
Regarding rental prices, the average rental price for industrial land in Grade 1 markets in the Southern region reached $189/m2/remaining term, increasing by 1% compared to the previous quarter and 13% higher than the same period last year. The market recorded significant transactions from Chinese and Japanese companies in various industries such as mechanical engineering, chemicals, plastics, rubber, and electronics.
In the Northern region, the average occupancy rate of Grade 1 industrial parks reached 80.2%, decreasing by 2.4 percentage points compared to the second quarter and increasing by 0.4 percentage points year on year. The decrease in occupancy rates by quarter is due to the operation of new industrial parks in Bac Ninh and Hung Yen, leading to an additional 597 hectares of industrial land supply.
In terms of demand, the market continues to record significant transactions from tenants in the plastics, textile, and eyeglass manufacturing industries in many provinces and cities. The absorption rate of industrial land in Grade 1 markets reached 251 hectares in the quarter. In total, in the first nine months of the year, the absorption rate exceeded 700 hectares, which is 18% higher than the absorption rate for the entire previous year. Industrial land rental prices continue to rise due to high demand. Specifically, the average rental price for Grade 1 markets in the Northern region reached $131/m2/remaining term, increasing by 2% in the quarter and 12% annually.
In the first 9 months of the year, the Southern and Northern markets recorded 450,000 m2 and 752,000 m2 of newly operational warehouses, respectively. With abundant new supply, the rental prices for warehouses and ready-built warehouses remain relatively stable, with an average rental price of $4.5/m2/month for warehouses and $4.9/m2/month for ready-built warehouses in the Southern market.
The occupancy rate of ready-built warehouses reached 56%, decreasing by 15 percentage points compared to the second quarter and 13 percentage points compared to the same period last year. Meanwhile, the occupancy rate of ready-built factories continues to maintain at a good level, reaching 91%, which is 1 percentage point higher than the second quarter. In the Northern market, the average rental price for warehouses is around $4.6/m2/month, and for factories, it is around $4.8/m2/month.
The occupancy rate of Grade 1 ready-built factory projects reached 82.9%, increasing by 4.7 percentage points compared to the previous quarter. For the ready-built warehouse market, major transactions continue to come from markets with large supply sources such as Bac Ninh and Hai Phong. The main demand still comes from 3PL companies and food production companies. The occupancy rate for ready-built warehouse segments reached 76.8% by the end of the third quarter of 2023, an increase of 1.2 percentage points compared to the previous quarter.
