HCM City (VNS/VNA) - Industrial land rents areexpected to increase by up to 10% in the next two years in both the north andsouth thanks to growing demand from various industries, experts have said.

Despite facing difficulties due to the economic slowdown, manyinvestors have announced tentative plans to expand their business andinvestment.

The latest quarterly Business Confidence Index fromthe European Chamber of Commerce in Vietnam (EuroCham) shows Vietnam’sglobal investment appeal remains strong. 

A notable 63% of surveyed businesses positioned Vietnam withintheir top 10 FDI destinations, EuroCham said.

VinaCapital’s ongoing annual investors’ conference also clearlyindicates the attractiveness of the Vietnamese market with nearly 100 delegatesfrom around the world attending it.

Don Lam, CEO and founding partner of VinaCapital Group, said:“It’s been three years since we were last able to host an in-person investorconference, and as we all know, the world has changed greatly since then.

“But one thing that hasn’t changed is Vietnam’s attractiveness forinvestment. Few countries have emerged from the global pandemic as strong as Vietnam has,and we are excited for our guests to see and hear that the opportunities forinvesting here are as abundant as ever.”

Recently UK company Essentra Components announced plans to investin Vietnam.

Scott Fawcett, its CEO, said: “With more manufacturers movinginto new territories as they look to diversify and become less reliant on onearea, they need partners that can move with them and continue to offer the samelevel of service they are accustomed to.

“Our expansion into Vietnam is a solution to that very problem and will giveour customers the reassurance that service can continue without interruption.”

The company said with its advantageous geographical positionand 17 free trade agreements with countries in Europe and the Americas, Vietnamhas become a strategic destination in the global supply chain, particularly inthe manufacturing and industrial component sectors. 

Major corporations such as Apple and LEGO have already begunbuilding primary production facilities in Vietnam at a cost of billions ofdollars. 

With international investors flocking to the country, the demandfor industrial land has been rising.

A recent report by property consultancy CBRE said that in thefirst nine months of 2023 investors from China, Vietnam, Japan, the US,and the European Union actively looked for industrial land, warehouses andfactories, and accounted for 70-80% of the inquiries it got. 

With Vietnam continuing to strengthen cooperation withcomprehensive strategic partners such as the US, the Republic of Korea andChina in recent times, investors from these countries were expected to lead thedemand for industrial real estate, it said.

The occupancy rate at industrial parks in the south was 81.9% as of the end ofthe third quarter, it said.

There were significant transactions by Chinese and Japanese enterprises inindustries such as chemicals, plastics, rubber, and electronics.

In the north, the occupancy rate was marginally down from the end of the secondquarter to 80.2% in the third quarter of 2023 though up 0.4percentage point year-on-year. 

It explained that this was because new industrial parks opened in Bac Ninh andHung Yen provinces, causing supply to soar. 

The market saw large transactions by businesses in plastics, textiles andcontact lenses, it said. 

The industrial land absorption rate was up 18% at 700ha. 

Thanh Pham, associate director, research and consulting, CBRE Vietnam, said:"The net absorption for the country as a whole is expected to be higher in2023, showing demand is recovering. We see a positive performance, especiallyin industrial land and ready-built factory segments.”

Demand for ready-built factories was mainly from industries such as garment,pharmaceuticals and electronics, she said. 

Demand for warehouse lease saw an impressive recovery from the previousquarter, with large transactions carried out by logistics enterprises, shesaid. 

Speaking about future trends, she expected developers andenterprises to focus on sustainable development and technology use. 

“Green criteria are gradually becoming among the important ones in buildingfactories and warehouses and manufacturing, spurring the development of greenindustrial parks.”

In the next two years industrial land rents are expected to increase by 6-10% ayear in both the north and south, according to CBRE. 

Rents for ready-built factories and warehouses are expected to seelower increases of 2-4%./.