Southern Industrial Land and Ready-built Factory 2Q21
In 2Q21, IP developers in the South set a new average land price peak at USD 113 per sqm per lease term
In 2Q21, the Southern industrial land market recorded new supply from Tran Anh Tan Phu IP in Duc Hoa District, Long An Province invested by Tran Anh Group. This brought the total leasable land area in the South to 25,220 ha, helping Long An province strengthen its position as an emerging investment destination for sustainable industrial development besides the two most-established provinces, Binh Duong and Dong Nai. Meanwhile, affected by the fourth wave of Covid-19, the RBF market not recording any new supply entering the market in the reported quarter, stabilised at 3.2 million square meters.
Healthy occupancy rate
Thanks to optimistic economic indicators and various unique inherent advantages , the industrial market in Vietnam still holds great potential to attract manufacturers and logistics supply chains. In 2Q21, JLL recorded many completed transactions in Ba Ria – Vung Tau despite the pandemic. The land lease agreements mainly came from heavy industry manufacturers that needed large land banks. The occupancy rate of IPs and RBF is 85% and 86%, respectively. Newly recorded land transactions during the outbreak show that both investors and tenants have gradually found ways to navigate the pandemic and continue their operations. In contrast, RBF recorded expansion of existing enterprises rather than new ones.
Land price continued to grow, but RBF rents slow down
Industrial land as a form of long-term investment has always maintained strong price growth over the years. In 2Q21, IP developers in the South set a new average land price peak at USD 113 per sqm per lease term, increasing 7.1% y-o-y. Whist RBF rents averaged at USD 4.5 per sqm per month for the whole region, increasing only by 0.5% y-o-y due to Covid-19, which greatly impacted rental activities for this type of pre-built real estate.
Looking for more insights? Never miss an update.
The latest news, insights and opportunities from global commercial real estate markets straight to your inbox.
Outlook: Completed infrastructure will push rents to keep increasing
Currently, Vietnam is still recognised as a successful country in controlling the epidemic, strengthening investors' confidence in its potential business environment. With a bright vision for the country’s manufacturing sector, provincial governments constantly build and improve new infrastructure systems like the Phan Thiet - Dau Giay, Bien Hoa – Vung Tau, or Ben Luc – Long Thanh Highways – all located in key markets surrounding HCMC. Southern industrial land prices are predicted to keep growing.
About 940,000 square meters of new RBF space will be launched by 2021-end if the epidemic is controlled and the market recovers.
- Southern area consists of HCMC, Binh Duong, Dong Nai, Ba Ria – Vung Tau and Long An 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.
- Saigon High-tech Park and Quang Trung Software Park are not included in the surveyed basket owing to their special characteristics.
Source: JLL Research