Industrial land rental price in Vietnam parks contributes much to total cost of setting up factory in Vietnam. This is a topic that many investors are concerned recently.
Industrial land demand for manufacturing investment has increased strongly in Vietnam, causing rental costs in many industrial parks from the North to the South of Vietnam to soar up by 15–18%. Savills Vietnam has just released a report on industrial real estate market rise in both demand and lease source in Northern and Southern Vietnam. In the North of Vietnam, rental costs in Hanoi amounted to USD 129 per m2 (up 13.1%), Bac Ninh was USD 95 per m2 (up 9.2%), Hung Yen to USD 83 per m2 (up 6.4) % over the same period in 2019). Particularly, the average land rental price in Thanh Hoa province is approximately at 40–50 USD per square meter, which is considered quite competitive. In Southern provinces, the land leasing costs in industrial parks is seemed to escalate, reaching 147 USD per square meter in Ho Chi Minh City, 107 USD per square meter in Binh Duong (up 4.9% compared to the same period of 2019). Meanwhile, cost to lease land (per square meter) in Dong Nai, Long An province respectively stands at 98 USD (up 6.5%) and 123 USD (up 7.8%). Especially, Tay Ninh province has become one of exceptional example for attracting investment capital. Some considerable name of industrial park such as Phuoc Dong Industrial Park in Tay Ninh has become a hub to absorb significant foreign investment capital. Up to 2020, total registered capital was at more than 4 billion USD flowing to Phuoc Dong Industrial Park. Therefore, Tay Ninh province take benefits from the reservoir of manufacturing capital, which creates hundred thousands of jobs for local people. In addition, Tay Ninh is near Ho Chi Minh City and this province will get more benefits from infrastructure development plans, and will move to industrialization sustainably with wide range of industries such textiel and garment, rubber tyres, sports wear, furniture, agricultural and food manufacturing, etc. Competitive land rental rates and large local labor force help this locality attract many businesses to find opportunities to set up factory. Although the land rental price has set a high level and is constantly increasing, industrial real estate of Vietnam continues to note the increase in occupancy proportion and tends to be short of vacant land supply in some areas such as Ho Chi Minh, Dong Nai, etc. Last year, in the Southern provinces, occupancy rates reached 88% in Ho Chi Minh City, 94% in Dong Nai, 99% in Binh Duong, 84% in Long An and 79% in Ba Ria Vung Tau. In the same period, in the North, the rates were 90% in Hanoi, 95% in Bac Ninh, 89% in Hung Yen, 82% in Hai Duong and 73% in Hai Phong. Head of Industrial Real Estate Department of Savills Vietnam said that the increase in demand for land, factories and warehouses caused rental costs in industrial zones near major cities to escalate. This interesting point of the market has reflected the surging demand for industrial land and can also be explained by the strong development of infrastructure investment of government and authorities. However, rising prices remain a concern for low-value manufacturing and low-margin profit industries such as textiles and furniture. Current foreign exchange rates seems acceptable for high-value multinational manufacturers operating in the technology sectors, high-tech supporting industries and automated machinery. Phuoc Dong Industrial Park in Tay Ninh province, Vietnam is welcoming high-tech industries, precision machinery, supporting industries and food manufacturing with the advatages of pretty low land leasing price and good geographical features.
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