Vietnam industrial land prices rise during COVID-19 pandemic

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(Photo: Resources and Environment News)

Jones Lang LaSalle (JLL) has just released a report on the industrial real estate segment with many optimistic developments amid the context of the Covid-19 epidemic.

The unit said that Covid-19 could be a new catalyst to accelerate the production shift faster, after being pushed by trade tensions last year. Therefore, industrial park real estate in Southeast Asia in general and Vietnam in particular will be more attractive in the future.

“Vietnam has remained a promising arrival since the wave of factory relocation from China began. Although the Covid-19 epidemic is causing certain difficulties for decisions and relocation activities, investors are still confident to raise land prices in the first quarter of 2020 as this is a long-term investment trend ”. , Mr. Stephen Wyatt, General Director of JLL Vietnam.

(Photo: Dan Tri)

According to JLL's quarter 1/2020 report, the North attracts the majority of large corporations who want to diversify their production portfolio next to their facilities in China, with well-developed infrastructure and the right location adjacent to China. The average land price reached 99 USD/m2/rental cycle, up 6.5% over the same period last year. Ready-built factory buildings, the preferred choice of small and medium-sized businesses, remain stable at rents ranging from US$ 4.0-5.0/m2/month and have been fully filled.

Meanwhile, in the South, the number of land lease requests increased and developers became more confident in increasing land rental rates. The average land price in the first quarter of 2020 reached US $ 101/m2/lease cycle, up 12.2% over the same period, according to Cafeland.

(Photo: Investment Bridge)

The report said companies looking to diversify their manufacturing portfolio outside China are attracted to Vietnam thanks to its proximity to the former.

"Industrial park developers remain confident that demand for land will continue to grow and therefore land prices are expected to increase in line with the long-term potential of Vietnam’s industrial segment," Stephen Wyatt, country head of JLL Vietnam, said.

Ready-built factories costing $3.5-5 per square meter per month are favored by businesses as indicated by the high occupancy rates, according to VnExpress.

Multinationals have been setting up operations in Vietnam for a number of years, and this trend has accelerated in the last two years with companies looking to diversify their operations and supply chains, the report said.

Although the Covid-19 outbreak could cause a delay in decisions following lease negotiations, the fundamentals of the market remain strong and would recover after the epidemic subsides, it added.

“Under the influence of Covid-19, the postponement of lease agreements and new demands will become increasingly clearer if the situation does not improve soon. However, the market will recover and grow rapidly after the epidemic is under control. The disruption of the global supply chain due to the impact of the disease has made businesses realize the urgency of diversifying their production portfolio, avoiding dependence on one country, ”JLL said.

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