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VIETNAM INDUSTRIAL REAL ESTATE MARKET REPORT Q4.2023 – NORTHERN REGION

The Industrial Real Estate Market Report for the fourth quarter of 2023 in the Northern region of Vietnam was conducted by the Research Team of RSL Group, covering four main topics on the general economic and investment situation in Vietnam and globally, an overview of the industrial land market, the market for ready-built factories/warehouses in 2023 and emerging market trends in the future. We invite esteemed readers to follow along:

1. ECONOMIC AND INVESTMENT SITUATION

In the world

Global inflation in general throughout 2023 tended to decrease gradually after a period of countries collectively raising interest rates to curb inflation along with decreasing energy prices. The Federal Reserve’s benchmark interest rate was kept at 5.25% – 5.5% from July 2023. The US dollar was trending downward as the global economic outlook weakened. The global commodity market experienced significant fluctuations due to economic, political and social factors such as the escalating Russia-Ukraine military conflict, instability in the Middle East, weakening demand, and tight monetary policies in many countries…

In Vietnam

Compared to the same period in 2022, the Gross Domestic Product (GDP) of the fourth quarter of 2023 increased by 6.71%, while the full year of 2023 saw a growth of 5.05%. Both the Consumer Price Index (CPI) and the core inflation rate for the whole year of 2023 remained within the government’s control target, with respective increases of 3.25% and 4.16%. In terms of foreign direct investment, the total registered capital reached 36.6 billion USD from 111 countries and territories that have invested in Vietnam. However, the import and export performance fell short of expectations, with the total trade turnover reaching 683 billion USD, a decrease of 6.6% compared to the previous year.

2. INDUSTRIAL LAND MARKET

(1 lease cycle = 50 years)

In the Northern region, the industrial land market in the fourth quarter of 2023 recorded many new supply sources of about 121 hectares. The average rental price for the full year of 2023 reached 131 USD/m2/lease cycle, an increase of about 25% compared to the same period last year. The absorption area reached the highest level in the past 5 years, with Hai Duong and Hung Yen leading in terms of net absorption rate. Some notable projects of the year include the expansion of Dong Van 1 Industrial Park in Ha Nam, Lien Ha Thai Industrial Park in Thai Binh province, and Viet Nhat Industrial Park in Bac Giang province…

From the first quarter of 2024 to 2026, the Northern market is forecasted to have approximately 5,300 hectares of new industrial land supply. At the same time, industrial land prices are expected to increase steadily by 8% – 12% per year.

3. READY-BUILT FACTORY AND WAREHOUSE MARKET

In 2023, the Northern region recorded the highest level of new supply entering into operation to date with a total of 770,000 m2 of newly built ready-built warehouses/factories. The ready-built warehouse and factory market has been attracting significant foreign investment capital since 2018. By 2016, the rental prices of ready-built warehouses/factories are forecasted to increase slightly by 1% – 4% per year.

In 2024, the demand for renting warehouses is expected to increase significantly in two locations, Bac Ninh and Hai Phong. Furthermore, some provinces and cities possess a favorable transportation system, such as Thai Binh with a coastal road connecting Hai Phong to Thanh Hoa, Quang Ninh with a network of large industrial zones along the Hanoi – Hai Phong expressway, or Hung Yen province with a new National Highway 39 route, which will also become attractive destinations to attract domestic and foreign investors.

4. NEW MARKET TRENDS

The trend of “Nearshoring” shifting production closer continues to drive the demand for ready-built factories and warehouses for lease (RBF & RBW).

Multi-functional factory

A multifunctional smart factory is a type of factory that combines multiple functions such as production plant, operational office, auxiliary facilities, and showroom for display. This type of facility provides convenient conditions for business owners to manage and operate the factory, easily introduce products to customers, and clearly demonstrate the production process and location.

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For more detailed information about the Industrial Real Estate Market Report 2023, please see more and download here.

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VIETNAM INDUSTRIAL REAL ESTATE MARKET REPORT Q3.2023 – NORTHERN REGION

Industrial real estate market report for the third quarter of 2023 in the Northern region of Vietnam was conducted by RSL Group Research Team, including 4 main contents about the general economic and investment situation in Vietnam and around the world, an overview of the industrial land market, ready-built factory/warehouse market and new market trends in the future. We invite readers to follow along:

1. ECONOMIC AND INVESTMENT SITUATION

In Vietnam

Gross domestic product (GDP) in the third quarter of 2023 increased by 5.33% over the same period last year, only higher than the growth rate of the same period in 2020 and 2021 in the period 2011 – 2023. Consumer price index Average (CPI) in the third quarter of 2023 increased by 2.89%, the first 9 months of 2023 increased by 3.2% over the same period last year.

Inflation in general was still being controlled according to the Government’s set target with an average increase in the first 9 months of 2023 of 4.49% compared to the same period in 2022. As of September 20, 2023, estimates of foreign investment projects had disbursed more than 15.9 billion USD, an increase of 2.2% over the same period in 2022. The index of industrial production (IIP) in the third quarter of 2023 increased by 4.57%.

In the world

At the end of September, the FED kept interest rates unchanged at the range of 5.25% to 5.50% – the highest level in about 22 years and warned that further increases would negatively impact investor psychology. The USD/VND exchange rate increased rapidly in the third quarter with the central exchange rate exceeding VND 24,000 for the first time in August.

Some reasons leading to this situation included declining aggregate demand, tightening monetary policy, rising world public debt, geopolitical instability…

2. INDUSTRIAL LAND MARKET

(1 Lease cycle = 50 years)

The industrial land area in the Northern region was maintained at a stable level of 14,400 hectares, with the occupancy rate reaching nearly 73% in the third quarter, equivalent to a gross absorption of 120 hectares. The average primary rental price reached 123 USD/m2/rental period. During the fourth quarter of this year to 2026, it was expected that about 5,300 industrial land supplies will enter the market, creating conditions for the Northern region to be ready to receive a wave of investment due to shifting production from China. Outstanding new projects coming into operation this year included Lien Ha Thai Industrial Park (Thai Binh), Dong Van 1 Industrial Park expansion (Ha Nam) …

3. READY-BUILT PROPERTY MARKET (RBF & RBW)

Ready-Built Factory Market – RBF

The ready-built factory market in the North continues to have exciting developments such as a high occupancy rate at 71%, average rental price reaching 4.9 USD/m2/month, net absorption reaching about 97,000 m2 over the Total existing supply is 3.3 million m2. The demand for renting factories rental mainly came from the Electronics, Computer, Optics, Machinery & Equipment industries, which are supporting businesses for large manufacturing companies in the industrial park. In the future, by 2026, the Northern region is expected to welcome about 1.1 million m2 of factories with the participation of projects such as CNC Tech factory phase 2-3-4 (Vinh Phuc), BW factory Nam Dinh Vu (Hai Phong), Core 5 Hung Yen project…

Ready-Built Warehouse Market – RBW

Similar to RBF, the ready-built warehouse market still maintained positive signals with the existing supply in the third quarter of 2.1 million m2, average rental price reaching 4.6 USD/m2/month and occupancy rate of 71% full. The demand for warehouse rental mainly came from the Electronics, Food & Beverage Manufacturing, E-commerce industries and 3PL companies providing support services to “Eagle” companies. Regarding the market outlook from the fourth quarter onwards, the North will have more new sources of warehouse supply to meet the investment wave of large manufacturers in Vietnam. Some prominent suppliers include Frasers Industrial Center Yen Phong 2C (Bac Ninh), Mapletree Logistics Park (Thuan Thanh III-B Industrial Park, Bac Ninh), Daiwa House cold storage (Minh Quang Industrial Park, Hung Yen)…

4. NEW MARKET TRENDS

In the future of the industrial real estate market, there are two trends that are attracting the attention of many investors and infrastructure developers: high-rise factories and eco-industrial parks (green industrial parks).

Multi-Storey Factory

With the positive outlook of the e-commerce industry and the need for fast delivery continuing to increase, the high-rise warehouse and factory model will soon become a trend. The biggest advantage of high-rise warehouses and factories is that they provide solutions to help optimize land funds and increase the business and production performance of enterprises.

Eco-Industrial Park

Eco-industrial Park (EIP) is an industrial park where the businesses inside head toward cleaner production activities, and efficient usage of resources; maintaining the relation and cooperation in production to perform industrial symbiosis. Developing the eco-industrial park model will contribute to helping Vietnam realize sustainable development goals and achieve zero net emissions by 2050.

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For more detailed information about the Industrial Real Estate Market Report for the third quarter and the first 9 months of 2023, please see and download here.