The advantages that help to promote industrial real estate development are gradually becoming inferior to the emerging challenges.
Specifically, industrial real-estate sector is predicted to be scarce new supply in 2023, stemming from the following factors: Delay in approval procedures due to legal problems, Vietnam's competitiveness in attracting FDI investment is less optimistic than other countries in Southeast Asia (SEA).
According to a report from VNDirect on industrial real estate recently published, the total land area of industrial parks in the Southern of Vietnam increased to 41 950 hectares, equivalent to 9,2% over the same period last year, the proportion of warehouses for lease accounted for to 66,6%, equivalent to 27 950ha, an increment of 8,2%.
For Northern market, the supply increased sharply, especially in the fourth quarter of 2022 with an increase of 7,9%, equivalent to 590ha, the total area increased to 11 923ha. For the whole year of 2022, the total area of the industrial park real-estate reached 16 915 hectares, an increase of 8,1%. The occupancy rate in this market decreased by 1 percentage point and 0,2 percentage point YoY down to 79%.
On the other hand, according to research from VNDirect, the increase in rent price brings benefits to both regions, the South with 10,5% and the North with 7,5%.
Accordingly, from the first quarter of 2022, there were no further proposals for the establishment of new industrial zones in both regions. In addition, the number of new industrial parks included in the national master plan for development of industrial parks is small.
The reason for this situation is due to the spread of industrial park development planning and the approval decision by local authorities. In particular, the change of leaders in many localities also slowed down the project approval process. This leads to the slow impact of site clearance, overlapping planning.
With the southern market, there has been no new supply of industrial real estate since the last 6 months of 2022 since the strong increment in supply from the beginning of the year. This market will face difficulties when implementing new projects in 2023
According to a forecast from VNDirect, in the period 2024 - 2027, the supply of the southern market is still limited when this region will have only 1 134ha of industrial real estate, 76% higher than the previous report.
Due to later development, the industrial real estate resource of the Northern market is still abundant and at a reasonable price. Although more projects will be approved, the supply shortage will last at least until the end of 2023.
In the period 2024 - 2026, the northern market will have an additional 3 757ha of industrial real estate, mainly concentrated in the provinces of Hai Phong, Vinh Phuc and Bac Ninh.
According to VNDirect, Vietnam's competitiveness to attract FDI is gradually weakening compared to other countries in SEA.
According to a report from the Ministry of Planning and Investment, the amount of processed FDI investment fund in February 2023 increased by 12,1%, reaching $1,2 billion. In the first two months of 2023, the amount of processed FDI’s fund decreased by 4,9% over the same period to $2,6 billion. Additionally, registered FDI capital decreased by 51,4% compared to the same period in February, so the total registered FDI capital from the beginning of the year only reached 3.1 billion USD (Down 38% over the same period).
This comes from factors in the unstable landscape of the global economy: inflation, slowing global growth, tightening financial liquidity from the FED’s interest rate hike.
Compared to Indonesia, which has enacted the Omnibus law to help to promote reforms to attract FDI from 2020 has achieved significant results: FDI inflows into the country in 2021 have increased by 10% compared to last year, and by 2022, it has increased to 44%, reached to 45,6 billion USD.
Compared to other countries in the region, Vietnam and Indonesia are the countries that receive the most FDI. However, the orientation of the two countries is different in which Indonesia is targeting the electric vehicle supply chain, while Vietnam is aiming to become a center for electronic equipment production.
The potential to attract capital for these two industries will continue to increase in the coming years, but other countries in the region have also actively grasped the trend of attracting FDI for electric vehicle production, including battery production, encouraging consumers to switch to electric vehicles.
But Vietnam is currently lagging in this trend, which may lead to a decrease in FDI attraction.
According to VNDirect's assessment: We realize that the development of electric vehicles and semiconductors will shape the investment landscape in ASEAN. The major changes in these two industries include attracting new types of investors, adding new segments in the value chain, expanding capacity and participating more in regional production networks.”
Source: https://vietnamfinance.vn/bat-dong-san-cong-nghiep-2023-nhieu-thach-thuc-dan-xuat-hien-20180504224282801.htm
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