Southern industrial rents 42% higher than in north

By Vu Le   March 1, 2023 | 05:39 am PT
Southern industrial rents 42% higher than in north
Tan Tao Industrial Park in Ho Chi Minh City’s Binh Tan District takes up an area of nearly 200 hectares. Photo by VnExpress/Quynh Tran
Average industrial land rents in the south are 42% higher than in the north, according to real estate consultancy Cushman & Wakefield Vietnam.

In the southern hub, which attracted investment earlier and more quickly than the north after the US lifted it’s devastating post-war blockade, industrial rent is on average US$159 per square meter per rental cycle. The figure is just $112 in the north.

Rents in Ho Chi Minh City currently stand at $300 per square meter on average, the highest-ever in Vietnam, compared with $235 in Hanoi.

Trang Bui, executive director of Cushman & Wakefield Vietnam, said industrial land rents in the south are higher than in the north because the southern market developed earlier and thus longer.

However, she said that industrial parks in the north have benefited from better planning because they were built later.

According to real estate consultancy CBRE Vietnam, being closer to China and having a more competitive industrial land rent than their peers in the South, industrial parks in the North are now receiving stronger production shifts from foreign manufacturing companies’ China + 1 strategy.

Northern localities with many industrial parks such as Bac Ninh and Hung Yen have seen a sharp increase in rents, some 7% a year.

The industrial land rental market in the North is expected to expand to such provinces as Thai Binh and Quang Ninh in the near future.

The North has more land for future industrial park development, thereby increasing supply and keeping rents more stable and competitive.

Meanwhile, the industrial land supply in the South is still mainly concentrated in provinces neighboring Ho Chi Minh City, or at the Cai Mep and Cat Lai ports.

According to Trang, this makes the southern region more likely to have a shortage of land available for industrial development, which is also a factor pushing up rents.

Both Cushman & Wakefield and CBRE forecast industrial park land rents in Vietnam will increase by 5-10% this year.

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