According to the development plan of industrial parks (IPs) in Vietnam, there are currently about 563 IPs with a total area of 210,900ha.
The actual number of industrial zones announced is 406, of which 361 projects are located outside the economic zone, and 37 projects are in economic zones and 08 projects are located in the border gate economic zones.
Commenting on the prospect of industrial real estate in 2023, Mr. Thomas Rooney, Senior Manager, Industrial Consulting Services, Savills Hanoi, said that Vietnam’s economic risk index is currently lower than other emerging markets such as Myanmar, Bangladesh, Laos, Cambodia or Malaysia.
In addition, Vietnam continues to benefit from foreign investment capital, advantages in labor supply and great export opportunities to the Chinese market. Despite unfavorable geopolitical factors in the world, the domestic economy is expected to continue to be stable thanks to domestic consumption.
However, the market still has some long-term challenges, especially for tenants, in terms of skilled labor and infrastructure. According to the representative of Savills, Vietnam has a large labor force, many new production investments and the economy is moving up the value chain, but there is still a shortage of skilled labor supply. Therefore, the Government needs to ensure that the quality and quantity of skilled labor are not too disparate compared to other regional markets to attract the attention of investors.
Regarding infrastructure, in relation to Southeast Asian countries, Vietnam is a country that has spent quite a lot on infrastructure development (5.8% of total GDP), however highway projects, Deep water ports and service ports need to be further improved. The southern region is in dire need of improved transport networks, especially roads.
To improve the quality of labor, Vietnam needs to focus on applying science and technology and improving quality human resources to boost productivity and economic growth in the future. Besides, improving infrastructure is also a mandatory requirement to attract investment with a more convenient transportation system.
According to VNDIRECT Securities Joint Stock Company, the IP real estate market will face a shortage of new supply from now until the end of 2023.
Specifically, for the southern market, after the supply boom in the first half of 2022, no new supply has been put into operation in the second half of 2022. The southern market will experience a difficult period to deploying new projects in 2023. And new supply for the period 2024 – 2027 is also quite limited.
In the North, the northern provinces started developing IPs later, so the existing land bank in some provinces is still quite abundant with reasonable rental prices. Although there are many projects waiting for approval, the shortage of new supply in the Northern market will last at least until the end of 2023, after which about 3,757 hectares of industrial land is expected to be put into operation in period 2024 – 2026, with the largest supply coming from Hai Phong, Vinh Phuc and Bac Ninh. VNDIRIECT realizes that the positive factors supporting the industrial real estate industry are fading as challenges gradually appear.
“First, we think that the industrial park real estate market will witness a scarcity of new supply in 2023 when the approval procedure is delayed due to legal problems. Second, we find that Vietnam’s competitiveness in attracting FDI is gradually weakening compared to other countries in the region due to increased competition from Indonesia and Malaysia when these competitors have favorable business and development environment for the electric vehicle industry and the semiconductor industry. Along with that, the global minimum tax that will be applied soon in 2024 may make the advantage of tax incentives disappear”, according to VNDIRECT.
