Vehicles drive along a road in the old quarter in Hanoi. — Bloomberg
HANOI: Industrial property was a bright spot in the Vietnam real estate market through the first half of this year, according to CBRE Vietnam.
Under the Hanoi real estate market insight in the second quarter of 2023 released by CBRE Vietnam, net absorption of industrial land in Tier-1 markets reached 386ha and 397ha in the north and south, respectively.
These figures are up by 60% for the North and 20% for the south, compared to the same period of last year.
Industrial land rental rates sustained strong growth in both regions due to limited land ready for handover.
The average rental rates for Tier-1 markets in the north and south reached US$127 (RM593) per square metres
Over the past four years, the average rental rates grew at 7% per annum in the north and 13% in the south.
Ready-built warehouses (RBW) and ready-built factories (RBF) witnessed strong growth in supply. In the first six months of 2023, the total area of RBF and RBW completed in the Tier-1 market in both regions reached 900,000 square metres, 60% of which was from the north.
The supply has grown at more than 20% per annum in the North and 18% to 49% per annum in the south over the last four years.
As competition increased, the rental growth of these segments was moderate levels of 2% to 3% per annum during this period.
The northern region continued to see strong demand from the electronics sector. During the first half of this year, the market recorded an expansion of big manufacturers such as Foxconn and Goertek in industrial parks in Bac Giang and Bac Ninh.
In addition, the strong expansion of Chinese manufacturers in various sectors also attributed good absorption of industrial land and RBF segment in the north.
Meanwhile, demand for the southern market was diverse.
Tenants from the automotive, garment and packaging industries were among the most active players looking for industrial land, RBF and RBW in the south.
The power supply in the north has been basically ensured since the end of June, but the alternating power cuts in some northern provinces have posed significant challenges for the manufacturing and export processing zones, according to Savills Vietnam.
This could create a wave of investment in Tier-2 provinces, experts said, as tenants and investors seek opportunities and relocate production plants to other areas. — Viet Nam News/ANN
