Industrial real estate adds supply to welcome FDI capital flow

Impressive growth in foreign direct investment in the first two months of the year with more than 4.29 billion USD and high demand for warehouse rental are the two main reasons driving the increase in industrial real estate supply.

Supply increases in the period 2024 - 2026

According to a report by global real estate consultancy Jones Lang Lasalle (JLL), by the end of 2024, the total supply of key industrial real estate is expected to reach 1.4 million square meters, 1.3 times higher than the supply in 2023. Accordingly, the North is expected to welcome a new supply of industrial and logistics real estate of up to 322,000 square meters. Previously, JLL also forecast that in 2024, the North will have an additional 700,000 square meters of ready-built factories, increasing the total supply by 1.6 times compared to 2023.

According to the above report, the occupied area grew positively compared to 2023. Previously, the first 6 months of 2023 saw industrial real estate in a gloomy period, then gradually grew steadily in the last 6 months of the year.

More than 25,000 m2 of ready-built factories at Phuoc Dong Industrial Park ( Tay Ninh ) will be supplied to the market in the first quarter of 2024.

In the South, according to Cushman & Wakefield, with the adjustment, announcement and approval of the Provincial Master Plan (2021 - 2030 period, vision to 2050), the new supply of industrial park land will continuously increase in the 2024 - 2026 period and is forecast to be around 6,100 hectares, solving the problem of limited industrial land fund.

The ready-built factory market will welcome a supply of about 2.2 million square meters during this period. Future factory rental demand will be maintained by both large manufacturing companies and small and medium enterprises, following the wave of FDI manufacturing pouring into Vietnam.

As for the ready-built warehouse market, about 1.4 million square meters are expected to enter the market. In addition to retailers, third-party logistics units and e-commerce, the demand for warehouse space is also from manufacturers and distributors.

Prospects from businesses with large industrial land funds

Data from the Ministry of Planning and Investment shows that as of February 20, 2024, foreign investors have invested in 16 out of 21 sectors of the national economy. The total newly registered capital, adjusted capital, and capital contribution and purchase of shares and capital contributions by foreign investors reached more than 4.29 billion USD, up 38.6% over the same period in 2023. The realized capital of FDI projects is estimated at about 2.8 billion USD, up 9.8% over the same period in 2023. According to analysis and assessment by experts, FDI capital will continue to grow in 2024 and achieve impressive numbers. Along with that, the demand for renting factories and land in industrial parks will increase.

According to CBRE, in 2023, industrial parks in the Northern region will record an average occupancy rate of 81%, while the Southern region will reach 92%. Currently, industrial land planning in some localities is facing difficulties due to issues of land valuation, conversion of agricultural land into industrial land and progress of compensation and site clearance. This creates a special opportunity for industrial parks that already have a large land fund for lease. Businesses can take advantage of market opportunities to develop and expand their operations when supply is limited.

Saigon VRG has great development advantages with thousands of hectares of clean industrial land. Photo: Loc An Binh Son Industrial Park (Long Thanh)

Saigon VRG Investment Joint Stock Company (code SIP) is one of the few enterprises that currently owns a clean industrial land fund of up to thousands of hectares. According to Mr. Tran Manh Hung, Chairman of the Board of Directors of Saigon VRG, the Company currently has a clean land fund of more than 1,200 hectares, of which more than 600 hectares of industrial land have investment policies.

"The Company's Board of Directors assesses that with this land fund, the Company will ensure sustainable development in the next 3-5 years," Mr. Hung commented.

Saigon VRG Investment Corporation is currently developing and managing 4 industrial parks in key areas in Ho Chi Minh City, Tay Ninh, and Dong Nai, including Le Minh Xuan 3 Industrial Park, Dong Nam Industrial Park, Phuoc Dong Industrial Park, and Loc An - Binh Son Industrial Park.

Possessing great advantages in land fund, the industrial parks under the management of Saigon VRG are invested in comprehensive, modern industrial infrastructure, large capacity to ensure maximum satisfaction of investors' needs. The industrial parks diversify rental products including ready-built warehouses, built-to-order warehouses to suit costs, meeting the real needs of many businesses.

By the end of 2023, Saigon VRG's 4 industrial parks had attracted more than 200 domestic and foreign investors with a total investment capital of about 8 billion USD. With the positive development of industrial real estate and the advantage of large land for lease, it is predicted that in 2024, businesses will grow steadily, contributing positively to the development of Vietnam's industrial real estate industry.

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