Northern industrial real estate strongly attracts FDI capital
According to Savills' 2024 Industrial Real Estate Focus Report, the manufacturing sector accounts for 48% of the total newly registered FDI capital in the Northern region, focusing mainly on high-value industries such as automobiles and electronics. Of which, the North attracts 7/10 leading corporations in the semiconductor sector. Bac Ninh province leads with the participation of 4 large corporations in the sector, including: Samsung Electronics, Amkor Technology, Hanmi Semiconductor and Victory Giang.
By Q1/2024, Vietnam will have 33 data centers with a capacity of about 80MW, mainly concentrated in Hanoi and Ho Chi Minh City, accounting for 94% of total supply, led by domestic carriers such as Viettel, IDC and VNPT.
Of which, Viettel is currently holding a large market share, especially after the inauguration of the country's largest data center in Hoa Lac (Hanoi) in April. This project has a total floor area of up to 4m21.000, providing 2 servers, and an electrical capacity of 60.000 MW, becoming the data center with the largest investment scale in the country.
Clarifying the strengths of the northern industrial real estate market for the manufacturing industry, Mr. Thomas Rooney, Senior Manager, Industrial Real Estate Services, Savills Hanoi said that the southern provinces mainly attract industrial real estate tenants from processing industries such as rubber, plastics, food and beverage. Meanwhile, the northern region has become the center of high value-added industries, including: automobiles, machinery and equipment, electronics and solar energy production.
"In the goal of positioning Vietnam as a high-tech manufacturing center, the North is considered to have greater resilience, becoming an attractive destination for investors in the coming time. This creates momentum for industrial real estate development.“, Mr. Thomas Rooney shared.
Vietnam is considered an emerging market with the fastest growth potential by 2035, with annual GDP growth of 6,2% thanks to consistent policies and maximizing trade potential.
In the first 9 months of 2024, Vietnam attracted 24,8 billion USD in committed FDI capital, with 2.492 newly registered projects, totaling 13,6 billion USD. Bac Ninh is the leading province with 18% of total FDI capital, equivalent to 4,5 billion USD, followed by Ho Chi Minh City with 8% and Quang Ninh province with 7%. Forecasts from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment show that Vietnam will attract 39 - 40 billion USD in FDI capital by the end of 2024.
In terms of FDI attraction sectors, manufacturing and processing accounted for 63% of the total capital, reaching 15,6 billion USD, up 10% over the same period last year. Total newly registered capital reached 9 billion USD, up 4% year-on-year. Of which, the North accounted for the largest proportion with 59% of newly registered FDI capital in manufacturing, equivalent to 5,3 billion USD. The South followed with 38%, equivalent to 3,4 billion USD.
Land fund and competitive rental prices boost northern industrial real estate
Savills experts assessed that the northern provinces have advantages in terms of abundant land funds and reasonable rental prices. In the first half of 2024, the northern economic zone provided 12.985 hectares of industrial land in 73 industrial parks, an increase of 12% compared to the previous year thanks to the expansion of industrial parks in Hai Phong, Hung Yen and Hai Duong.
In particular, the industrial land rental price in the North is 28% lower than in the South. The Northern provinces have an average occupancy rate of 78%, with an average land price of 132 USD/m2/1-time rental for the entire long-term lease contract.
Bac Ninh has the largest land supply in the North and a competitive rental price of 148 USD/m2/single lease, lower than the average rental price in the South of 1 USD/m183/single lease. Bac Ninh is also the leading province in the supply of ready-built factories and warehouses in the North with 2% market share in the whole region.
Mr. Thomas Rooney said that in order for Vietnam's industrial real estate industry to maintain its attractiveness and continue to grow strongly in the future, infrastructure and transportation systems need to continue to be developed and planned synchronously and effectively.
As Vietnam moves towards increasing value-added in its manufacturing sectors, education and training reforms to improve worker skills are needed. In fact, despite the abundant labor force, especially in the North, the majority of workers are still low-skilled.
“The trend of sustainable development, specifically the development of green industrial parks, is increasingly gaining attention. The conversion and development of green industrial parks will bring many advantages to factories and warehouses compared to traditional models. Green projects not only meet the sustainable development goals of businesses, but also create a positive development and working environment,” Mr. Thomas Rooney emphasized.
According to Mr. Thomas, currently, most industrial park projects are developed according to the traditional model. Converting a conventional industrial park into an environmentally friendly industrial park is not simple because it is costly, requires time and requires careful consideration by the Government on the legal framework such as preferential policies along with the application of credit support for investors to help reduce the burden of initial costs.
Source: Etime Dan Viet Electronic Magazine
