Possessing large development space, reasonable land rent, industrial parks in the North are becoming the bright spot of the real estate market when continuously receiving foreign capital inflows.
According to the Ministry of Planning and Investment, as of February 20, 2023, the total registered FDI capital, adjusted and contributed capital to buy shares, buy capital contributions from foreign investors reached nearly 3,1 billion USD, of which about 2,55 billion USD has been disbursed.
There have been 51 countries and territories investing in Vietnam. Leading country is Singapore with a total investment of over 978,4 million USD, accounting for nearly 31,6% of total investment capital in Vietnam; ranked second is Taiwan (China) with nearly 407,1 million USD, accounting for 13,1% of total investment capital; Netherlands ranked third with a total registered investment capital of nearly 369 million USD, accounting for more than 11,9% of total investment capital; followed by China, Korea, Sweden…
Foreign investors have invested in 39 provinces and cities across the country. However, there is a difference that the northern provinces are dominant in attracting foreign capital flows compared to the southern provinces as before.
Specifically, the leading locality in attracting FDI at the moment is Bac Giang with over 824,3 million USD, accounting for more than 26,6% of total registered investment capital and increasing by more than 8,4 times compared to the same period in 2022.
Previously, in January 2023, Quang Ninh ranked only 13/53 in terms of FDI attraction, by February 2023, this province had jumped 9 positions, surpassing Dong Nai to enter the top 4 provinces and cities that attracting the highest FDI in the country for the first 2 months of the year.
The rise to the top in attracting FDI is due to the fact that these localities have had more signed cooperation deals and many new registered projects in the first phase of 2023.
For example, Goertek - one of Apple's largest partners has signed a memorandum of understanding to sublease 62,7 hectares in Nam Son - Hap Linh Industrial Park (Bac Ninh). Another major component manufacturing partner for Apple, Foxconn, also signed a contract to lease a 45ha land area in Quang Chau Industrial Park (Bac Giang) for $62,5 million to expand production. Lease contract lasts until February 2057.
Similarly, American semiconductor company Amkor Technology said it will soon open a factory in the northern region. Pegatron - a company that produces components for electric car company Tesla and assembles iPhones from Taiwan (China) has also put its factory in Quang Ninh into operation.
Continuously receiving good news in early 2023, the industrial zones in the North are becoming the bright spot of the real estate market. In particular, with its competitive advantages and large development space, many experts assessed that the Northern industrial park market will be able to lead the industrial and industrial real estate segment in the near future.
Price is one of competitive edges
Previously, the South was a market that was more likely to attract FDI inflows than the North. However, the rapid and strong development has made the southern market has less room to attract foreign investors. Especially, the price of land in the southern industrial zone is reaching a much higher threshold than the northern provinces.
According to Cushman & Wakefield Vietnam's South-North Industrial Park Cost Competitiveness Report, the average primary rental price of industrial real-estate in key economic region of Southern Vietnam is $159/ m2 for the whole rental cycle, 42% higher than the Northern key economic region (112 USD/m2).
Leading the South is the urban core of Ho Chi Minh City (HCMC). In the city, the industrial land rental price is currently at 300 USD/m2 for the whole lease cycle - setting the peak for industrial land rent in Vietnam, 28% higher than Hanoi (235 USD/m2).
Having the same assessment, CBRE's recently published report also shows that in 2022, South’s average rental price of industrial land in the tier 1 market (developed industrial capital) will increase by 8 - 13% year on year, reached 166 USD/m2 that calculated on the remaining lease term. Meanwhile, the average rent of the northern tier-1 markets was only $120/m2 for the remaining lease term, up 11% year-on-year and 38% lower than in the South.
According to CBRE, the location closer to China and the more competitive industrial land rental price in the South, which has helped the Northern industrial zones to easily catch the production shift trend and China + 1 strategy of many manufacturing companies has been going on for the past few years.
In which, provinces such as Bac Giang, Bac Ninh, Quang Ninh, Hung Yen, Hai Duong, Hai Phong are currently the leading localities in attracting FDI.
Sharing with Realtimes, Mr. Tran Khanh Quang, CEO of Viet An Hoa - A real-estate company, said that the difference in industrial land rents both reflects the development history of the industrial park between the South and North and the gap of growth rate.
Specifically, the industrial land rental price in the South is higher than in the North because the industrial real-estate market in the South is developed earlier and longer. As for the North, the industrial planning is synchronous and systematic, the rent is also at a moderate level. These will be advantages for the northern industrial park market to take the lead in attracting foreign capital flows.
“Due to the convenience of the infrastructure system, industrial park projects have the opportunity to develop widely and stretch from Hanoi to seaports, passing through many provinces and cities. This helps the North have more real-estate resources for future industrial park development. Thereby increasing supply and keeping rents stable and highly competitive.
Meanwhile, the supply of industrial land in the South is still mainly concentrated in the neighboring provinces of Ho Chi Minh City or Cai Mep port and Cat Lai port. This makes the southern region likely to suffer from a shortage of available real-estate for industrial development, also that is a factor for pushing up rents," said Quang.
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