Industrial property expansion supported by long-term goals
Due to the steady rebound of the Vietnamese economy and the interest of foreign investors, the value of industrial land in Dong Nai, Long An, Binh Duong, Bac Giang, and Hung Yen is expected to have grown by 30-40 per cent by the end of 2022, according to Savills Vietnam.
Industrial real estate was one of the few categories to retain growth last year, led by the greatest GDP growth rate of 8.02 per cent over 2011-2022. According to the Vietnam Association of Realtors (VARS), the occupancy rate of industrial zones (IZs) in Vietnam surpassed 80 per cent in 2022 and will continue to rise in 2023.
According to VARS, several IZs in Hanoi, Ho Chi Minh City, Dong Nai, Bac Ninh, Bac Giang, and Binh Duong are almost fully occupied. This results in a 10 per cent rise in industrial land rent in 2022 compared to the same time in 2021.
Cushman & Wakefield stated in a January research report that industrial land demand in the first half of 2023 is likely to fall owing to the global economic outlook but will be supported by the “beneficial supply chain move away from China.”
It predicts that industrial land rentals will rise in 2023 owing to increased compensation costs and a lack of available land in Hanoi and Greater Hanoi. The asking price reached $112 per square metre per lease cycle in the fourth quarter of 2022, an increase of 7 per cent on-year owing to the strong demand in the first half of this year. Due to China’s reopening of border crossings and the expansion of port capacity in Haiphong, it is anticipated that Quang Ninh and Haiphong will see a rise in demand.
It is anticipated that Vietnam’s economic growth would oscillate between 5.8 and 7.2 per cent, which is greater than other nations in the area and the aim set by the National Assembly. However, Vietnam is not exempt from the slowing trend of the global real estate market. High interest rates will constrain inflation around the globe, even as production demand tends to decline, particularly orders from the United States and Europe, the research added.
Investigations are now ongoing in Vietnam to “decontaminate and promote transparency” on the corporate bond market. This has a significant impact on the economy and the debt structure of investors, according to Troy Griffiths, deputy managing director of Savills Vietnam. The value of the stock market’s indices decreased by almost 30 per cent.
“The adjustment process will contribute to a more transparent and robust corporate investment climate. As global economic uncertainty subside, we do not believe that investors should rush out of the market. The State Bank of Vietnam is doing an excellent job of maintaining the stability of VND compared to other currencies,” Griffiths said.
According to Griffiths, real estate is an investment for the long run and investors will need other finance sources in the medium and near term. “However, that this effect is transient and would ultimately be addressed to the advantage of the whole market, as more transparency and stronger regulation will lead to fewer difficulties,” he added.
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