Industrial In Ho Chi Minh City

Performance: On the momentum of growth

Till September 2020, industrial land rental rate in Ho Chi Minh City has reached 150 USD/sqm/term in average-the highest rate in the country. The current occupancy rate mostly stays over 80% because the demand for existing industrial real estate has increased by nearly 40% over the same period while the existing land for lease is as low as 3,000 ha. Additionally, among the southern provinces, Long An is attracting interest from investors looking for options to replace the traditional industrial zones in HCMC. Long An is currently attracting an impressive number of FDI projects and registered capital of 1,009 projects and 6.15 billion USD (as of September 2020). Therefore, Long An may become a competitor to HCMC in following years.

Supply: No new supply

Up to now, the total number of industrial parks in Ho Chi Minh City remained 18 providing nearly 3,700 hectares of industrial land being available for lease. Due to the impact of the COVID-19 and the new supply of industrial land for lease in HCMC, there are still problems with compensation and site clearance procedures. In term of greater HCMC area, in Southern industrial park, Long An is going to be approved to establish 5 more industrial clusters in Can Giuoc with total scale of over 260 hectares.

Demand: Exciting, volatile

Currently, domestic enterprises, especially foreign ones, tend to hire prefabricated factories, which helps businesses proactively source capital, save costs, save time and can get into operation right away. In addition, due to the high demand which led to the lack of land fund as well as high renral rate for industrial land in Ho Chi Minh City, many enterprises are tending to move to provinces nearby, especially Long An or Binh Duong.

Outlook: Potential to strong growth

Currently, the influence of COVID-19 has been pushing foreign companies to move their factories to new area beside China, Vietnam and Indonesia are the two potential countries that most companies are considering. With the start of EVFTA in back in August, Vietnam is expected to become a new “factory of the world” as well as attract more European firms to join the market. Especially in HCMC, when the Metro line comes into operation, the CBD will easily connect with the outskirts of the city that will make not only its industrial market but also greater area’s land price increase in the future. In northern HCMC, Binh Duong is currently embarking on the project of Nam Tan Uyen Industrial Park expansion phase 2.