Vietnam emerges as popular industrial property destination: CBRE

Sunday, 2020-08-02 21:09:03
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A corner of the Vietnam-Singapore Industrial Park in the northern province of Bac Ninh. (Photo:
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NDO/VNA – Vietnam has emerged as a popular destination for industrial property projects as increased labour costs, trade disputes and COVID-19 prompt global manufacturers to vary their supply chains throughout Asia, according to CBRE.

The US-China trade conflict benefited Vietnam’s industrial property market in 2019 as manufacturers began shifting production to alternative markets.

Average asking rents for industrial land in Vietnam increased by as much as 10%, with some industrial parks reporting rent growth of up to 40% year-on-year, CBRE said.

Vietnam Jones Lang Lasalle Company (JLL Vietnam) said land prices in the industrial property segment have reached new levels even though the disease has impacted the land lease process.

COVID-19 has caused temporary difficulties for upcoming business plans, but with a long-term investment strategy, industrial real estate in Vietnam is still very attractive.

In the second quarter of this year, JLL Vietnam recorded rising land prices with an average of US$106 per sq.m for a lease cycle, up 9.7% compared to the same period last year for the southern industrial property market.

Meanwhile, the rent price of ready-built factories was still stable at US$3.5-5 per sq.m per month, because the contract is only short term for 3-5 years and tenants are also susceptible to the pandemic's impact.

Although there are some barriers to entry, including a shortage of industrial land in prime locations and a lack of infrastructure in key areas, Vietnam’s manufacturing industry and industrial real estate market stand to benefit from the rapid changes in global trade and supply chains, as long as trade with developed countries remains a key growth driver, according to CBRE.