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Investment in industrial real estate is on the rise

Investment in industrial real estate is on the rise

Friday 29, 05 2020
Capital has been flowing into factories and industrial land, and this real estate segment may witness a boom in the near future.

Industrial real estate experienced constant growth

Savills said that although most industries have suffered heavy losses due to the negative impact of the Covid-19 epidemic, industrial real estate has constantly developed. The evidence lies in the emergence of inflows of domestic and international investment capital (FDI) into Vietnam's processing zones and industrial parks.

Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said that the company has received many requests from domestic and foreign investors who want to find locations in industrial parks to pour capital and seek business opportunities. It is noteworthy that there are many giants who want to do business on a large scale, aspiring to become the developer of a whole industrial park as they are looking for land with area of up to 500-1,000 hectares. Meanwhile, some other investors who are investing in industrial real estate are manufacturers with the goal of proactively expanding their factories.

Besides hot industrial real estate spots like Ho Chi Minh City and Hanoi, satellite cities such as Long An, Binh Duong, Dong Nai, Ba Ria - Vung Tau, etc. are also being explored by land investors to build workshops. These are all provinces with convenient locations, abundant resources and labor, synchronous infrastructure and efficient transport connections.

Earlier, BW Industrial Joint Stock Company revealed to the press about its ambition to expand industrial land in the period of 2019-2022. Despite having a land fund of up to 230 hectares allocated in 6 provinces and cities of Vietnam, this industrial real estate giant said it would continue to increase the land fund by 3-5 times in the next 4 years. The purpose is to fully exploit the potential of the industrial - e-commerce - logistics market in Vietnam.

Since joining the industrial real estate market in Vietnam, BW Industrial has been a pioneer industrial park investor with a flexible and unobtrusive factory model. This product line aims to use the factory area effectively, and is designed and integrated with technologies that are compatible with specific industries.

Investment in industrial real estate is on the rise

Era of ready-built factories and ware houses

In its mid-May report, CBRE also said that 2020 is the era of ready-built factories and warehouses in Vietnam. During the outbreak of Covid-19, the demand for rental of ready-built warehouses increased sharply due to the stagnation in import and export of goods when transport activities were interrupted, and the strong growth of e-commerce.

Data of CBRE shows that the supply of ready-built factories will continue to grow. It is expected that by the end of 2020, the total supply of ready-built factories and warehouses in the Northern region will reach nearly 2 million m2 of leased floors, increasing by 25.3% over the previous year. In the South, the total area of ready-built factories will reach nearly 2.7 million m2, an increase of 28.2% compared to 2019. According to this company, after the pandemic is under control, the average rent of ready-built warehouse promises to increase by 4-11% over the same period.

Mr. Su Ngoc Khuong believed that the pandemic can be seen as both an advantage and a disadvantage to industrial real estate in Vietnam. Covid-19 has motivated investors to shift their concerns to other markets, including Vietnam, instead of the Chinese market. The downside is that trade promotion is facing many difficulties due to social distancing which has caused obstacles to transportation and communication.

However, Dr. Khuong recommends that facing the strong wave of foreign investment in industrial real estate, the Government should prioritize industries that are not labor-intensive. In addition, when foreign investors enter the industrial real estate market, Vietnam also needs to provide them with employees who are educated and skillful in order to serve the overall economic development of the country.

Real Estate Industry Report

Source: CBRE


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