Vietnam’s industrial parks ready to take off

In 2017, registered foreign direct investment (FDI) in Vietnam rose 44.4 per cent, with 44.2 per cent of total inflows going to manufacturing and processing. Off the back of a successful Apec meeting last year, the government will focus on attracting high-tech and environmentally friendly projects. Investment will be encouraged in renewable energy projects, high-tech agriculture and smart cities, said Savills Vietnam, a listed real-estate service provider.
“We’re seeing growing investor interest in the industrial market, directly into industrial zones as well as a rise in those seeking income-producing industrial assets, build-to-suit opportunities and logistics-based warehousing opportunities,” said Neil MacGregor, managing director of Savills.
He said up to two-thirds of Japanese enterprises hoped to expand the scope and scale of business in Vietnam. Meanwhile, many enterprises said that there was a tendency to move factories from China and India to Vietnam, opening great opportunities for industrial real estate.
Vietnam has 325 industrial parks with a total area of 94,900 hectares. HCM City, Bac Ninh, Thanh Hoa are leading in attracting investment to these parks. Hanoi has also attracted foreign businesses, especially to many industrial parks in suburban regions.
Under the development plan for Hanoi, the city will have nine more industrial parks on a total area of 2,360ha by 2020, an increase of 132 per cent against current supply.
Besides connecting factories to main roads to attract more investors and increase the occupancy rate in industrial parks, localities need to find solutions on promoting development of residential and commercial areas around the parks, Savills said. The development of urban and commercial areas around industrial parks would meet the demand for workers’ homes.
Expert Dang Hung Vo said Vietnam’s industrial real-estate segment had developed well and had suffered less impact from the market than other property segments.
Meanwhile, JLL Vietnam said more than 1,300ha for developing industrial parks were expected to enter the southern market in the next year, mostly from extended phases of existing projects. 
JLL said occupancy and rental growth rates were both expected to go higher due to active occupier demand and positive economic prospects. Good-quality ready-built space and related services in industrial parks was likely to experience a strong increase in demand.
To support the trend, Savills launched an industrial services wing in January to support industrial clients in market entry, portfolio diversification, expansion, acquisition/disposal and strategic leasing.
It will introduce opportunities in a variety of locations, including Tan Thuan Export Processing Zone, Vietnam-Singapore IP I, Hiep Phuoc Industrial Park, Nhon Trach II Industrial Park, Chau Duc Industrial Park, Phuoc Dong Industrial Park and Loc An Binh Son Industrial Park.
JLL Vietnam said at it quarterly report on the HCM City property market in the fourth quarter of 2017 that the Southern industrial supply in the second half of 2017 was relatively constant compared to that in the first half, with a total leasable land area of about 24,000ha.
Of the total, Binh Duong and Dong Nai remained the leading markets, accounting for nearly 60 per cent, given their better accessibility to transportation infrastructure.
The vacancy rate in the operating IPs stood at about 25 per cent at end-2017, down 1.8 per cent from the fourth quarter of 2016 and driven by healthy demand. 
A healthy performance was observed in existing ready-built factories, which recorded more than 85 per cent occupancy rate, given the strong demand and limited leasable stock.