Industrial real estate enterprises take advantage of FDI attraction

The amount of foreign direct investment capital realized in Vietnam in 2022 is estimated at nearly 22.4 billion USD, which is considered a good signal for domestic industrial park real estate enterprises in 2023.

According to the General Statistics Office, realized foreign direct investment capital in Vietnam in 2022 is estimated at nearly US$22.4 billion, up 13.5% over the previous year. This is the highest foreign direct investment in the past five years and is considered a good signal for domestic industrial park real estate enterprises in 2023.

As of December 20, 2022, the total registered FDI capital in Vietnam, including newly registered money, adjusted documented worth and value of capital contribution, and foreign investors’ share purchase, is estimated at nearly 27.72 billion USD.

Foreign investors have invested in 19/21 national economic sectors, in which the processing and manufacturing industry leads with a total investment of more than 16.8 billion USD, accounting for 60.6% of the total registered investment capital, followed by the real estate business with the total investment capital, over 4.45 billion USD, accounting for 16.1% of total registered investment capital.

Regarding the number of new projects, the wholesale and retail sectors, the manufacturing and processing industries, and professional science and technology activities attracted the most, accounting for 30%, 25.1%, and 16, respectively, 3% of total projects.

According to JP Morgan, Vietnam is emerging as a center for manufacturing electronic components and manufacturing services, forecast to contribute 65% of the total production of AirPods, 20% of iPad and Apple Watch, and 5% of MacBooks in the year 2025.

[Exploiting strengths to develop industrial real estate]

John Campbell, Deputy Director and Head of Industrial Services at Savills Vietnam, commented that global supply chain disruptions and geopolitical fluctuations are catalysts for diversification in the manufacturing sector in the Vietnamese market.

At the market exploration stage, investors often need to rent factories to operate on a small scale. They can then consider long-term investment decisions, expanding production through land purchase and factory building, which in turn leads to growth in demand for ready-made factories and warehouses.

Additionally, analysts assess that the development of synchronous infrastructure to increase regional connectivity has become a bright spot to help industrial real estate continue to grow in the coming time.

According to VCB Bank Securities Company (VBCS), the development of ring roads 3 and 4 in Ho Chi Minh City and Hanoi will help economic growth in the provinces adjacent to the two big cities; at the same time, strengthen the connection with the center, move production outside the central area.

Notably, the developing Southern Expressway will also elevate areas around Ho Chi Minh City and the West. Connecting the western provinces with the Cai Mep-Thi Vai port cluster and connecting to the North-South highway helps goods move faster at home and abroad.

In 2022, the Cai Mep port cluster reached the top 11/370 most efficient ports in the world according to the port performance index (CPPI).

Statistics in December 2022 of SBS Securities Company’s analysis team also show that the whole country has 84 industrial parks with an almost complete occupancy rate, the rest reaching an average of about 80%. In particular, industrial real estate continued to increase in both price and demand.

Industrial real estate rental prices increased by about 10% over the same period, averaging from 100-120 USD/m2/lease cycle, and rents may continue to grow, especially in the southern market. This type of real estate can achieve a yield of 8-11%, and the average rental income is more than 4 %/per year.

Meanwhile, the analysis team of Vndirect Securities Company believes that the growth of industrial park real estate businesses may need help when new supply declines due to difficulties in legal procedures.

The industrial real estate market will have a supply of supply at the end of 2023 in both the South and the North, causing competition in the industry to increase and the advantage of enterprises with clean land funds available.

Currently, industrial park real estate businesses are constantly expanding their land bank. Industrial Development and Investment Corporation – Joint Stock Company (Becamex IDC) has recently contributed capital to establish VSIP Can Tho to do Vinh Thanh industrial park project phase 1.

The project has a land use scale of 293.7ha and a total investment of nearly VND3,718 billion; located in the overall scheme of Vinh Thanh industrial park with a scale of 900ha, the investor is a joint venture Becamex IDC – Joint Venture Company of the area. Vietnam-Singapore Industrial Park (VSIP) and Vietnam Singapore Industrial Park and Urban Development Company (VSIP JSC).

As for Chau Duc Sonadezi Company, analysts say that the rental area of Chau Duc industrial park is still guaranteed to remain stable in the coming years.

VNDirect estimates the leasable area of this industrial park at about 581 hectares and will continue to be leased from 40-60 hectares per year in 2023-2032.

Closing the last trading session of the week (January 6), stocks of the real estate industry group were under the general adjustment pressure of the market. For example, Becamex IDC’s BCM shares are priced at 82,900 dongs, Sonadezi Chau Duc’s SZC stock is priced at 27,900 dongs, DIG shares of the Construction Investment Development Corporation are priced at 15,100 dongs, and KDC shares of the Kinh Bac Corporation, Urban Development Company, costs 24,950 VND…/.

Source: Diep Anh (VNA/Vietnam+)