Industrial land rents shoot up on rising demand, stagnant supply

In the north, average rents rose by 15.1 percent to $76 per square meter in Hai Duong Province, 13.1 percent to $129 in Hanoi, and 9.2 percent to $95 in Bac Ninh Province, according to a recent report by real estate consultancy Savills Vietnam.

Hai Duong recorded a land absorption rate of 82 percent, while it was 90 percent in Hanoi and 95 percent in Bac Ninh.

In the central region, in Thanh Hoa, rents were competitive at $40-50. Taiwanese manufacturing giant Foxconn is in negotiations with the province for a $1.3-billion investment.

In the south, rents rose 18 percent to $65 in Ba Ria-Vung Tau Province, 7.8 percent to $123 in Long An Province and 4.9 percent to $107 in Binh Duong Province.

Last year, absorption rates were 79 percent in Ba Ria-Vung Tau, 84 percent in Long An and 99 percent.

Experts said demand for industrial real estate has been rising since 2018, leading to a shortage, and the rising rents and high absorption rates could be a cause for concern for multinationals looking for locations close to major cities.

John Campbell, head of the industrial real estate department at Savills Vietnam, said the high rates are a cause for concern for sectors with low added value and profit margins like textile and furniture.

If the prices keep going up, Vietnam’s competitiveness in terms of price would be weakened unless there is more new supply, he warned.

By the end of last year, Vietnam had 284 operating industrial parks with an absorption rate of 70 percent. Another 85 parks were under construction.