Industrial real estate is still considered by experts as a bright spot in the gray picture of the real estate market. However, the development of this segment still has many obstacles, and practical solutions are needed to solve them.
Resistance detection
In the week of June 1 report of the Vietnam Association of Real Estate Brokers, although industrial real estate is a bright spot, the development of this segment still has many obstacles.
Talking about the resistance to industrial real estate, the Chairman of the Vietnam Association of Real Estate Brokers TS. Nguyen Van Dinh said that one of the major obstacles that industrial real estate is facing is the land clearance process in many localities. The slow site clearance makes the progress of many industrial parks prolonging construction time as well as legal costs. In addition, industrial parks are lacking synchronization in the process of deployment and development when the connection infrastructure is not smooth, utilities and services to serve the lives of workers are still lacking, and the technical standards of factories are still low.
Another obstacle to industrial real estate is that licensing procedures also make investors afraid. Mr. Dinh said that localities need to implement the practice of "carpeting" the campaign to welcome investors and strengthen preferential policies and other legal support services. Prioritize industrial parks by the orientation, achieve targets to limit the amount of waste and energy consumption, limit impacts on the environment, and reduce pressure on infrastructure.
Dr. Nguyen Van Dinh, Chairman of Vietnam Association of Real Estate Brokers
Besides, the gloomy global economic situation also affects FDI inflows. When things get tough, foreign investors become cautious and want to do more research before making a decision.
The latest report of the Foreign Investment Agency shows that, as of May 20, 2023, the total registered foreign investment capital in Vietnam reached nearly 10.86 billion USD, only equal to 92.7% over the same period. In terms of capital structure, there were 962 new projects granted investment registration certificates, with a total registered capital of more than 5.26 billion USD. In addition, 485 times of projects were registered to adjust investment capital, up 22.8% in the number of projects but down 59.4% in the capital over the same period.
The deceleration of FDI, more or less, will greatly impact the growth rate of industrial real estate.
FDI remains the lever of industrial real estate
According to statistics of the Ministry of Planning and Investment, the country currently has about 563 industrial parks under planning in 61/63 provinces and cities, 397 industrial parks have been established, 292 industrial parks have come into operation with a total natural land area of more than 87.1 thousand hectares, The area of industrial land is more than 58.7 thousand hectares. There are also 106 industrial parks under construction with an industrial land area of about 23.8 thousand hectares.
Data from the Vietnam Association of Real Estate Brokers shows that, by the end of Q1/2023, the occupancy rate of tier 1 industrial parks across the country continues its upward trend, reaching over 80%, of which the southern region averages 85%, leading the country. Binh Duong is the locality with the highest occupancy rate, reaching over 95%.
In general, the occupancy rate of industrial parks in the northern and southern key markets will remain above 90% in 2022. Some industrial parks in Hanoi, Ho Chi Minh City HCMC, Dong Nai, and Binh Duong are almost filled.
In the survey of Batdongsan.com.vn, it has also shown that the attraction of industrial real estate in the North, Bac Ninh, Bac Giang, Thai Nguyen, Vinh Phuc, and the areas around Hanoi has increased rents by an average of 10-12% per year. In particular, Bac Ninh warehouses and factories have hot spots that increase prices by 15% within 1 year. Not only rents, but occupancy rates in these industrial parks are also very high.
Industrial real estate is considered a bright spot in the market but now there are obstacles
Vietnam has been constantly becoming an attractive place for investment in the manufacturing industry. The increase in FDI from foreign corporations many times over the past decade is the clearest evidence, of building strong confidence in growth in the eyes of international investors. Although there have been signs of deceleration, foreign capital inflows will still pour into Vietnam and create the growth of industrial land.
Explaining this growth, Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers, said that the reason why Vietnam's industrial real estate attracts investment is that FDI inflows into Vietnam have constantly grown over the years, which is the foundation for building strong belief in growth.
In addition, according to Mr. Dinh, the transport infrastructure has developed strongly and synchronously, shortening the travel distance and US-China tensions leading to a wave of production shift away from China has helped us create attraction for investors. In addition, attractive advantages such as cheap labor, abundant supply of industrial land, factory construction costs, tax investment incentives, and active participation in Vietnam's new-generation trade agreements have all helped Vietnam obtain foreign capital inflows.
Four solutions to break resistance
With the belief in foreign capital inflows based on the premise of advantages, Vietnam will still be the destination of FDI inflows. This helps industrial real estate not to be in the general gloom. But for it to become a bright spot, we need practical solutions to gradually remove the resistance.
According to VARS, the change in the economy and the emergence of new needs require clear and strong policy directions to support investors and promote market development commensurate with available potential.
Firstly, industrial park planning information needs to be public and transparent in the overall master plan map of the region and locality so that investors can feel secure to research and seize investment opportunities.
Second, infrastructure needs to be promoted and focused on investment. This is the most important factor affecting the potential of real estate growth as well as increasing competitiveness, especially connected transport infrastructure.
Third, simplify licensing procedures, and solve problems with land procedures, compensation, and site clearance that prolong construction time, and legal costs.
Fourth, localities need to implement the practice of "carpeting" campaigns to welcome investors and strengthen investment incentive policies and other legal support services. Prioritize industrial parks by the orientation, achieve targets to limit emissions and energy consumption ... limit impacts on the environment, and reduce pressure on infrastructure.
When these obstacles are gradually removed, industrial real estate can accelerate the recovery and will become a bright spot.
Source: Realtimes.vn
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