The attraction of the ready-built factory segment

The ready-built factory for lease market in key southern industrial provinces is very active with 79 hectares successfully traded in the first 6 months of the year. Demand in this segment is forecast to continue to increase.

The ready-built factory segment is increasingly attractive to investors. In the photo: A factory for rent in Di An ( Binh Duong ) Photo: Gia Phu

High occupancy rate

Ms. Trang Bui, General Director of Cushman & Wakefield Vietnam (C&W), commented that despite the scarcity of land supply, the ready-built factory segment in the Southern region has recently been very prosperous.

As evidence, in the first 6 months of the year, 79 hectares of factory for lease were successfully transacted in key industrial provinces in the South, mainly in Binh Duong, Long An and Ba Ria - Vung Tau. Ready-built factories had an absorption rate of 172,000 m2, mainly in Binh Duong, while ready-built warehouses recorded a net absorption rate of about 74,000 m2.

The factory leasing segment is identified as playing an important role in the business strategy of Saigon VRG Investment Joint Stock Company (Saigon VRG). Mr. Tran Manh Hung, Chairman of the Board of Directors of Saigon VRG shared that in the first months of 2024, the Company leased 110,000 m2 of factory area, reaching about 90% of the total built factory area.

C&W estimates that in the next three years, approximately 6,200 hectares of industrial land will be launched on the market. The ready-built factory and warehouse segments will also have additional supply with figures of 1.4 million m2 and 1.9 million m2 respectively, of which 55% of future supply will be located in Dong Nai province, where Long Thanh airport is located.

Saigon VRG leaders said that the demand for factory rental in the suburban area of ​​Ho Chi Minh City is very high. The company is expanding the exploitation of Loc An - Binh Son Industrial Park (Dong Nai) phase I with 8 factories, total scale of 9.8 hectares and has signed contracts to lease 6 factories. "The company is negotiating with a number of partners from Korea and Japan", Saigon VRG leaders added.

Another name in the industrial real estate sector, BW Industrial, also launched two ready-built factory and warehouse projects in Binh Duong, providing 300,000 m2 and 19,000 m2 respectively; the project in Thu Thua Industrial Park (Long An province) provides the market with about 115 hectares of rental area.

According to C&W data, the occupancy rate of factories for rent in the Southern Key Economic Zone is currently at 71%, with a supply of approximately 6.1 million square meters. Factory supply is concentrated in the provinces of Dong Nai (2 million square meters), Binh Duong (1.8 million square meters), Long An (1 million square meters), Ho Chi Minh City (800,000 square meters), and Ba Ria - Vung Tau (400,000 square meters).

Seeing the positive signals from investors about the need to expand warehouses and factories, and the market with many successful transactions and high occupancy rates in this segment, some "big guys" have decided to convert the project's function from warehouses to factories for rent. For example, a large-scale ready-built warehouse project in Binh Duong has converted more than 60% of the ready-built warehouse floor into ready-built factories since the second quarter of 2024.

JLL said that in the second quarter of 2024, following the launch of the Cainiao Dong Nai Logistics Park Project, SLP introduced Phase II of the SLP Park Long Hau Project in Long An, adding more than 27,000 m2 of new leasable area. SLP has successfully completed 2 projects in the Southern region, affirming its position in the top 5 leading developers with a market share of 8.8%. JLL also expects that about 100,000 m2 of new facilities will be completed in the second half of 2024.

Great investment attraction

C&W's survey shows that the average asking price for primary industrial land in the southern provinces is at 176 USD/m2/lease term, up 2.9% quarter-on-quarter and 4.8% year-on-year. Factory rental prices increased by 1.1% quarter-on-quarter and 2.5% year-on-year, to 4.7 USD/m2/month. The average warehouse rental price was recorded at 4.5 USD/m2/month, stable quarter-on-quarter and up 1.2% year-on-year.

Although factory rental prices are currently quite high, due to high demand and scarce supply, this segment is increasingly attractive to investors.

Mr. Hardy Diec, CEO of Industrial Park Management and Services Joint Stock Company (KCN Vietnam) - a company specializing in leasing ready-built factories and having projects across the country - emphasized that the positive flow of foreign direct investment (FDI) into Vietnam is a good opportunity for businesses operating in this segment.

“No land purchase and construction costs required, significantly reducing initial investment capital for businesses, shortening operation time, diverse area scale… are the advantages of pre-built factories in attracting investors,” Mr. Hardy Diec analyzed.

A representative of Vietnam Industrial Park Company predicts that in the second half of 2024, FDI capital flows into Vietnam will continue to maintain a stable growth momentum and the market will also be more vibrant. Therefore, Vietnam Industrial Park will deploy a variety of products such as ready-built factories, ready-built warehouses, combined warehouses and construction solutions on demand to meet investor needs.

“After the sales process, Vietnam Industrial Park continues to support customers in carrying out registration procedures, applying for licenses, etc. according to regulations, along with many other consulting and support services to help customers quickly deploy production,” emphasized the representative of Vietnam Industrial Park.

For Saigon VRG, the demand for finding land to build large-scale factories in Long Thanh (Dong Nai) and neighboring areas of Ho Chi Minh City will increase when infrastructure and transportation projects in Ho Chi Minh City and Dong Nai are about to be completed and upgraded. The Company advocates taking advantage of existing capacity, creating a factory fund to meet the needs of investors and create a good, long-term source of income.

Source: https://baodautu.vn/batdongsan/suc-hut-tu-phan-khuc-nha-xuong-xay-san-d220629.html