Industrial land prices in the North are a big advantage, with an average of about 138 USD/m², 20% lower than in the South.
Currently in the South, to rent strategic locations in tier 1 areas, such as Binh Duong or Ho Chi Minh City, land prices can reach up to 300 USD/m2. Meanwhile, the Northern market only has an average price of 180 USD/m2 for tier 1 areas such as Bac Ninh.
In the Northern region, key provinces such as Bac Ninh, Hai Phong and Thai Nguyen are becoming the leading destinations for FDI projects in the manufacturing sector. Bac Ninh, with its proximity to Hanoi and developed infrastructure, has attracted many large-scale projects from multinational corporations.
Meanwhile, in the Southern region, Binh Duong has also emerged as an important industrial center, with the participation of many FDI enterprises in the manufacturing and processing sector. However, the North is still superior in terms of the number and scale of new projects thanks to advantages in costs, complete transport infrastructure, etc.
According to Savills, infrastructure in the North is considered to be strongly developed, with 10 completed highways and 4 other projects under development. Meanwhile, the South has about 7 highways.
Ms. Pham Thi Thu Trang, Senior Manager, Industrial Business Development Department at Core5 – Indochina Kajima, commented: In Vietnam, road transport is still the main mode of transport. Therefore, the ability to move conveniently from production areas to consumer markets helps businesses optimize logistics costs. In particular, the highways connecting industrial parks with Hanoi and the Chinese border further increase the attractiveness of the North to foreign investors.
Compared to the South, the North has planned more economic zones. Notably, the new coastal economic zone in Hai Phong with a scale of more than 20.000 hectares. In addition, the North also attracts investment thanks to its competitiveness in labor resources, when the average salary in the South is currently the highest in the country, recorded at 9,3 million VND.
Many experts agree that Vietnam's industrial real estate market has great potential, but one of the main challenges remains the shortage of highly skilled labor.
This is particularly important as Vietnam moves towards increasing value-added in its manufacturing sectors. The abundant workforce is concentrated in the North, but the majority of the workforce is still low-skilled. To overcome this problem, education and training reforms to improve worker skills are needed.
In the coming time, infrastructure development will become an important factor to help improve Vietnam's competitiveness. Currently, infrastructure projects are being implemented concentratedly in some areas, and need to be expanded and developed synchronously nationwide.
In addition, improving the transportation network connecting industrial zones and consumer markets will help optimize logistics costs, creating favorable conditions for businesses. Strong infrastructure will not only support the movement and transportation of goods but also enhance the ability to attract foreign investment to Vietnam.
Data from the Ministry of Construction's second quarter 2024 report on the industrial real estate segment shows that the rental capacity and occupancy rate in industrial parks in the first 6 months of 2024 in key industrial parks in the North reached over 80%, and in the Southern market, the rental capacity reached about 90%.
According to the Institute of Construction Economics (Ministry of Construction), for the market of ready-built warehouses and factories, the average occupancy rate in industrial parks in the North is about 70% for ready-built warehouses and 85% for ready-built factories; in the South, this rate is about 60% for warehouses and 85% for factories, respectively.
The average land rental price in industrial parks in the first 6 months of 2024 increased by about 5 - 8% compared to the same period last year. For ready-built factories and warehouses, the rental price is basically stable. According to the survey, the average rental price in popular industrial parks is currently about 3,5 - 5 USD/m2/month, the rental price for the entire rental cycle is about 135 - 185 USD/m2/rental cycle.
Source: Construction Newspaper
