Vietnam industrial real estate picks up steam

An illuminated Vietnamese flag on a building at night in Da Nang, Vietnam, on Wednesday, May 3, 2023. Photographer: SeongJoon Cho/Bloomberg

HANOI: The demand for industrial real estate has begun to pick up steam in recent months as foreign manufacturers are expanding their presence in Vietnam.

Foreign investors are hunting out industrial land lots to expand their operations in the country. Most of them operate in the electronics, semiconductors, textiles and solar energy sectors.

Remarkably, Quanta Computer reached a deal with Nam Dinh Province in April to build a factory of US$120mil (RM554mil) in My Thuan Industrial Park.

Boltun Corp and QST International Corp followed suit with an investment of US$165mil (RM761mil) in Bac Tien Phong Industrial Park.

The quest for land lots was more arduous in the south as most of the lots in industrial parks had been occupied. Notably, the industrial parks in Binh Duong and Dong Nai Provinces had reached 95% in occupancy rates.

The rising demand for industrial real estate has given a big boost to the segment of ready-built factories. Many lessors in the north have taken one step ahead by building more ready-built factories to cater to the growing need for facilities.

Cold storage warehouses are another category of facilities coming back in favour recently. However, the supply of cold storage warehouses remains tight as their construction requires so high an initial outlay that few lessors can afford.

Thomas Rooney, senior manager of industrial services, Savills Hanoi, said Vietnam had spent around 5.8% of its gross domestic product on facilities. The effort significantly improved the country’s trans-provincial ties.

Part of the money went to 12 projects of the North-South Expressway, whose construction began in January this year. The projects would go through 15 provinces and act as a catalyst for local economic growth.

The senior manager also said labour costs in the country were increasing but very slightly.

Although the costs remained modest in comparison with those in other regional countries, the shortage of well-trained workers discouraged many investors.

He urged the government to take active measures to expand its skilled labour pool, thereby staying on par with other regional countries in attracting investors. — Viet Nam News/ANN