Houses and offices benefit from industrial real estate

An increase in the occupancy rate of industrial parks in Vietnam will create a huge source of housing and office demand for the real estate market.

Mr. John Campbell, Senior Consultant, Industrial Services Department of Savills Vietnam, said that in the first two quarters of 2019, Vietnam's industrial real estate market recorded positive growth and this will create a big push for housing market, office.

To date, 326 industrial parks have been established with a total area of ​​95,500 hectares. The market recorded 251 industrial parks which were operating with 60,900 hectares (74% of the filled area), 75 industrial parks (29,300 hectares) are under construction, compensation and site clearance; 17 coastal special economic zones have a total supply of 845,000 hectares with 3.6 million employees.

According to this expert, when the occupancy rate of industrial parks is increasing, the labor force, managers, experts working here will surely need houses. On the other hand, manufacturers (businesses, corporations) also need to set up working offices and representative offices in the production area to facilitate the management and trade connectivity.

Besides houses and offices, there are two connected markets with strong demand to connect with the industrial real estate market; it is likely that retail real estate will also benefit from this demand chain. Because where there are housing and office development, where immediately comes the service associated to serve this real estate ecosystem.

Mr. John Campbell said that FDI in the industry in the first half of 2019 recorded 1,723 newly registered projects, equivalent to US $ 7.41 billion. The manufacturing segment attracted 605 projects, accounting for 71.2% of FDI and US $ 13.15 billion, increasing 39.8% year on year.

According to data from the Ministry of Planning and Investment, Hanoi and Ho Chi Minh City are the two most attractive cities, accounting for 26.3% and 16.7% of total FDI. Followed by Binh Duong accounting for 7.4% and Dong Nai accounting for 6.7%. Capital investment from Hong Kong (China) accounted for 28.7% with 5.3 billion USD, followed by South Korea with 2.73 billion USD and China with 2.28 billion USD. In the first 6 months, the industrial zone and economic zone attracted nearly 340 FDI projects with a total capital of nearly 8.7 billion USD.

Vietnam's industrial real estate is growing on the rise of FDI capital 10 times during the past decade. Abundant industrial land is facilitating production projects and increasing rental options for both ready-built factory buildings (RBF) and custom-built workshops (BTS).

However, this expert said, Vietnam needs to carefully choose the upcoming industrial projects to grow more in the value chain, increase competitiveness and sustainable development. Cheap labor and investment incentives, especially preferential taxes, will continue to become the leading foreign investment attraction in Vietnam. But as it continues to transition to high-value industries, Vietnam must focus on quality rather than quantity of investment.

According to Ha Thanh