Industrial land rents to continue rising

By Trung Tin   January 26, 2021 | 06:15 pm PT
Industrial land rents to continue rising
Tan Tao Industrial Park in Binh Tan District, Ho Chi Minh City. Photo by VnExpress/Tran Quynh.
Industrial land rents will repeat last year’s upward trend as multinationals continue to relocate their factories to Vietnam, a new report says.

The industrial real estate sector is recording the highest growth in decades despite pandemic impacts. Last year, rents rose 7.9 percent year-on-year, and this is likely to be repeated this year, according to a report by real estate consultancy Jones Lang LaSalle (JLL).

Leading brokerage firm SSI Securities Corporation (SSI) also expected industrial rents to rise 7-8 percent in the southern region and 5-6 percent in the north this year.

Vietnam’s real estate rents are still lower than other countries in the Southeast Asia, which is an advantage for growth, the SSI report said. Rents are 25-30 percent lower than Indonesia and Thailand, which are Vietnam’s rivals in competing for foreign direct investment (FDI), it noted.

The growth in rent is set to benefit industrial real estate developers who saw their stock prices rise by an average of 69.7 percent last year as Vietnam reaped the benefits of being one of the few countries that tackled the Covid-19 pandemic effectively.

Demand for industrial land had been rising because of the manufacturing shift from China to Vietnam and the pandemic just hastened it, and the pace could pick up further post-pandemic, SSI said.

The report noted that in the first quarter of this year China’s Oppo plans to rent 62.7 hectares of land in the northern province of Bac Ninh, while Taiwanese electronics manufacturer Pegatron is eyeing a similar move in the port town of Hai Phong.

Ho Chi Minh City records the highest rents nationwide at $160 per square meter per term, according to real estate consultancy Colliers International. Other southern localities like Long An Province are also seeing rents rising as they emerge as rivals in attracting FDI flows.

Su Ngoc Khuong, senior director of real estate service firm Savills Vietnam, said that one factor that will contribute to industrial rents growth this year is the government has ordered localities to expand industrial zones to meet foreign investors’ demand.

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