Demand for ready-built factories and warehouses in the South is increasing

Ready-built factory and warehouse products are of great interest.

After a gloomy first half of the year, demand for ready-built factories and warehouses in the South has grown again in the last months of 2023. According to survey data from JLL Vietnam, the modern ready-built warehouse market in the South continues to welcome new supply in the fourth quarter of 2023. Of which, nearly 160,000 m2 of newly built floors in Ho Chi Minh City and Long An have increased the market size to 1.9 million m2, an increase of 26.3% over the same period in 2022.

Meanwhile, rents saw a slight increase to USD 4.77/m2/month, up 3.9% YoY, mainly driven by the entry of new high-quality projects with high rents. Domestic demand is forecast to continue to be the main driver for the logistics market in 2024, while the recovery of cross-border trade activities will be slow. Therefore, investors are also becoming more cautious with their plans to deploy new projects.

JLL Vietnam said that about 340,000 square meters of modern ready-built warehouses are expected to be put on the market in 2024. The market size continues to expand, while demand has not fully recovered, making the advantage in negotiating transactions more favorable for tenants.

Cushman & Wakefield's report also shows that in the third and fourth quarters of 2023, ready-built factory and warehouse leasing activities in the South have become more vibrant with absorption rates 2.4 times and 6.7 times higher than the previous quarter, respectively. In particular, Dong Nai province has led in leasing demand.

Ms. Trang Bui - General Director of Cushman & Wakefield said that the total supply of warehouses in Ho Chi Minh City has now reached 5.1 million square meters. Meanwhile, industrial parks and warehouse logistics in this large urban area are all filled, some places reaching nearly 100%. Demand is forecast to increase in the coming time. Meanwhile, supply cannot meet demand, increasing competitive pressure for retail and transportation businesses.

Mr. Alex Crane - Managing Director of Knight Frank Vietnam said that the ready-built factory and warehouse market has been attracting strong foreign investment capital, especially in the suburban areas of Ho Chi Minh City, where the supply of ready-built warehouses reaches 2.1 million square meters, contributing to creating a market that favors tenants, with an average rental price of about 4.5 USD/square meter/month in the South.

According to experts, the gradual increase in the industrial production index shows great promise for the industrial real estate market, especially the demand for ready-built factories and warehouses. Consulting firms also recorded an increasing number of requests and site surveys from multinational manufacturing, logistics and e-commerce enterprises, reflecting the growing demand for industrial products.

The industrial market is changing with the participation of more investors. As the manufacturing and logistics sector develops, industrial products are becoming more diverse, including ready-built factories, warehouses, multi-storey facilities, combined facilities, climate-controlled buildings and build-to-suit buildings. The ready-built factory segment is forecast to continue to be vibrant with about 2.5 million m2 coming into use from now until 2026 with the participation of both domestic and foreign investors. The absorption rate of ready-built factories will continue to increase in the following quarters, benefiting from the shift of production facilities to Vietnam.

Source