Industrial park real estate becomes attractive after epidemic

After two difficult years because of the epidemic, industrial park real estate businesses accelerate their land fund expansion.

A race to expand the land bank

In early 2022, the industrial real estate market has received new projects. Particularly, Saigontel Long An Co., Ltd., a member of Saigon Telecommunications Joint Stock Company (Saigontel, stock code SGT), has been granted a decision on investment policy in Nam Tan Lap Industrial Park by the People’s Committee of Long An province with an area of ​​more than 244 hectares in Tan Lap commune, Can Giuoc district (Long An). The total investment of this project is more than 2,590 billion VND.

Saigontel, a unit specializing in providing Internet services in industrial parks, online trading games, mobile phones, telecommunications equipment products, has recently entered the field of industrial real estate.

In addition to this project, Saigontel is also the investor of Dai Dong – Hoan Son Industrial Park I and II project with a scale of 96 hectares and total investment capital of 1,000 billion VND in Bac Ninh and factory for lease in Da Nang (15 ha). In addition, the Company also cooperates to develop the project of an industrial park and a Saigon – Chan May non-tariff zone in Chan May economic zone.

This enterprise is chaired by Mr. Dang Thanh Tam – Chairman of Kinh Bac Urban Development Corporation (KBC code), so it has strengths in developing industrial park real estate. In 2021, the Company’s revenue was VND 706 billionincreasing 50% compared to 2020; profit after tax reached nearly 68 billion dongs, 5.4 times higher than in 2020.

Facing the wave of investment shifting globally, businesses have entered the race to expand the industrial park land fund.

Previously, Phat Dat Real Estate Development Joint Stock Company (code PDR) formerly specializing in residential real estate has reached out to industrial zone real estate with projects in Cai Mep. , Ba Ria – Vung Tau and Quang Ngai.

PDR’s real estate projects in Dung Quat and Quang Ngai have a scale of 1,152 hectares, of which 838 hectares are for industrial park infrastructure and the rest is for urban services.

It is known that PDR aims to develop more industrial park land fund by 2023 to nearly 6,000 hectares in the provinces of Quang Ngai, Binh Duong, Dong Nai, Ba Ria – Vung Tau, Da Nang, and Dong Thap.

KBC also informed that in 2022, the Company would promote industrial zone real estate exploitation. Currently, KBC is actively applying for investment permits in 3 industrial parks, with a total area of ​​​​nearly 1,300 hectares in Hai Duong, after being added to the planning at the end of 2021.

The KBC has submitted an investment license application in Binh Giang 1 Industrial Park (150 ha), while Trang Due 3 Industrial Park has applied for approval from the Ministry of Planning and Investment. KBC has completed the compensation and clearance of more than 100 hectares and is expected to start handing over from the second quarter of this year.

Vietnam Rubber Industry Group (code GVR) is actively converting rubber plantation land to industrial parkland, intending to put 4,000 hectares into operation in 2022 – 2024. Investment Corporation and industrial park development (Becamex, code BCM) are also implementing the Becamex-Binh Phuoc project with a total area of ​​4,600 hectares, of which there are about 2,400 hectares of industrial and 2,200 hectares of service and urban land.

According to estimates by VNDirect Securities Company, the land supply for industrial parks in Vietnam will be expanded by 44,760 hectares in 2022 – 2025 to meet the rapidly increasing demand, in which they will focus expansion in the Red River Delta, North Central Coast, and Central Coast.

The basis for solid profit growth plans

The Government’s quick implementation of the Covid-19 vaccine coverage campaign for the people and the policy of flexibly adapting to the epidemic, creating favorable conditions for product development, and socio-economic recovery have generated peace of mind for domestic and foreign businesses.

Along with the shifting wave of FDI enterprises globally, foreign enterprises are increasingly turning to Vietnam. Recently, Samsung Group has decided to spend nearly 920 million USD on building a new factory in Thai Nguyen.

Neil MacGregor, General Director of Savills Vietnam, said that the real estate market in 2022 will skyrocket in the industrial and logistics real estate segments. This sector has been highly sought after in the past few years and continues to grow as factories set up bases in Vietnam for industrial development.

Industrial park real estate prospect has brightened up after two difficult years because of Covid-19. VNDirect Securities Company forecasts that land rent will increase by 6 – 10% compared to 2021 in both the South and the North, in the context of high demand while limited supply.

Also, according to Mr. Can Van Luc, industrial park real estate prices could increase by an average of 10% across the country.

A survey by VNDirect shows that industrial land rental prices in southern satellite cities increased by about 5.2% in 2021. The market for ready-built warehouses and factories is emerging with a significant increase in new supply. Rental demand has also increased with average occupancy rate of 89.6%.

In the North, demand continued to exceed supply leading to a 2% increase in average occupancy rate in 2021 over the same period, to 86.6%. The average land rental price increased by 6-8% over the same period, to 108 – 110 USD/m2/lease term.

Phuoc Hoa Rubber Joint Stock Company, in addition to the core business of rubber, also participates in industrial zone sector. This year, the Company sets a target that Tan Binh Industrial Park Joint Stock Company (a member of PHR) with a leasing area of ​​50,000 m2 will bring in total revenue of nearly 270 billion VND with profit after tax of 132 billion VND.

Becamex has approved the business plan for 2022, with both revenue and profit increased compared to 2021. Specifically, the total revenue target is 6,814 billion VND increasing 5% compared to the total revenue generated in 2021. Planned profit before tax is 1,664 billion VND, and profit after tax is 1,381 billion VND increasing 25% compared to the realized profit in 2021.

Meanwhile, KBC, which already owns an extensive land bank, is setting ambitious targets in 2022 with revenue of VND 9,800 billion and profit of VND 4,500 billion, up 127% and 474%, respectively, compared to that of the previous year.

Analysts say that industrial park real estate will continue to be a bright spot in 2022, driven by solid production expansion in both FDI and domestic enterprises; Booming e-commerce, increased inventory requirements, and supply chain diversification help drive demand for industrial parkland for warehousing services and boost public investment in infrastructure that will generate convenient traffic connection of industrial zones.

(Source: dautuchungkhoang)