Northern Industrial Land and Ready-built Factory 2Q21
Land price remained unchanged at USD 107/m2/lease term in 2Q21
In 2Q21, Viglacera Yen My developer introduced new IP in Yen My (Hung Yen), lifting a total cumulative leasable land area in the Northern market to roughly 9,700 ha. Viglacera is also planning to kick-off the construction of Thuan Thanh IP in Bac Ninh within 2021.
RBF market also welcomes new supply, mostly in Hai Duong province, raising its total supply of RBF in the Northern market to approximately 1.9-million sqm. Moreover, 2Q21 was also a playground for M&A deals, of which the most notable deal was the acquisition of a 49% stake in KTG Bac Ninh Industrial Development JSC in Yen Phong IP by Boustead for about 6.9 million USD.
Occupancy rate remained stable despite the spread of new Covid-19 variant
A series of large projects were announced in 4Q20 and 1Q21, such as the expansion of the LG display project or the landing of giants like Foxconn, Pegatron into northern industrial zones. The outbreak of Covid-19 at the end of April slowed down the market in 2Q21 with mainly small-scale projects and no prominent FDI. As a result, the occupancy rate of northern IPs remained at 75%, while RBF saw a decrease in occupancy rate compared to 1Q21 as the market welcomed new supply. Worst affected by the pandemic, the number of SME businesses suspended in 1H21 increased by 22% y-o-y. Of these, the number of suspended enterprises in the manufacturing and processing industry, accounting for 11.9%, also negatively impacted the occupancy rate of RBF.
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Land prices and rents levelled off
The fact that industrial parks in Bac Ninh and Bac Giang had to suspend production due to the impact of the epidemic has restrained the growth rate of industrial land prices. Land price remained unchanged at USD 107/m2/lease term in 2Q21, while it was still recording an increase of 5.9% y-o-y, slowing the growth momentum compared to 1Q21. Similarly, RBF also recorded a lower growth rate compared to 1Q21, staying at 4.7% y-o-y.
Outlook: Many developers are eyeing opportunities in the Northeast region
Although it has not been officially confirmed, the fact that Pegatron is expected to increase investment capital in Vietnam after its first project in Hai Phong, reflecting the upbeat demand for industrial real estate in the future. In addition to the provinces in the Red River Delta, Northeast provinces such as Bac Giang, Quang Ninh, and Thai Nguyen are attracting increasing attention from investors, thanks to the competitive rental prices and the improving infrastructure. Land prices in these areas are projected to continue growing at 8-10% y-o-y. Similarly, the RBF market outlook is also vibrant in the Northeast region, with many new investors entering the market, such as GNP Industrial or Vietnam Industrial Park JSC.
- Northern area consists of Hanoi, Hai Phong, Bac Ninh, Hung Yen and Hai Duong markets.
- Land prices exclude Infrastructure maintenance fees, service fees and VAT. Lease term means the remaining land lease term of the project life time.
- Rents exclude VAT and service charges.
- Hoa Lac High-tech Park is not included in the surveyed basket owing to their special characteristics.
Source: JLL Research