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Savills: Opportunities abound in Hai Phong's industrial real estate

Released at: 14:52, 06/04/2019

Savills: Opportunities abound in Hai Phong's industrial real estate

Photo: Vinfast

Investment wave being seen in Vietnam's industrial property sector, according to latest report from Savills Vietnam.

by Hong Nhung

Vietnam’s industrial real estate market possesses strong growth potential because of both supply and the expansion of the manufacturing sector, according to the latest Quarterly Market Report from Savills Vietnam. Growth in industrial real estate came in at 12.8 per cent in the first quarter of this year.

Many projects entering market

In its reports on Ho Chi Minh City and Hanoi’s real estate market in the first quarter, Savills Vietnam identified ongoing industrial property projects and current transactions in the market.

The US’s TTI Inc. is planning to set up a solar panel manufacturing plant and an R&D center at the Saigon Hi-Tech Park (SHTP) in Ho Chi Minh City worth $150 million, while US aircraft components manufacturer, the Universal Alloy Corporation (UAC), began construction of its $125.5 million Sunshise aerospace components factory in central Da Nang city.

In addition, South Korea’s Changshin Vietnam began construction in February of its $100 million footwear factory at the Tan Phu Industrial Park in southern Dong Nai province, the largest FDI project in the province. With $200 million in investment, Vietnam’s first aircraft engine parts factory, South Korean Hanwha Aero Engines, began shipping products in January.

According to Savills, industrial production rose 10.3 per cent year-on-year in the first quarter due to stronger manufacturing production and increased electricity and supply, with manufacturing output rising 12.8 per cent. Meanwhile, Vietnam’s PMI was 51.2 points, the weakest since March 2016, due to silent demand and falling employment. Manufacturing output was still expanding, however, above the 50-point threshold.

Hai Phong - A key industrial hub

“Hai Phong has become a key industrial hub thanks to its improving logistics infrastructure, abundant land supply, and strong efforts by local government,” said Mr. John Campbell, Senior Consultant, Industrial Services at Savills Vietnam.

Most of Hai Phong’s industrial parks (IPs) are in the Dinh Vu - Cat Hai Economic Zone, one of 15 economic zones in Vietnam. According to Article 16 in Decree No. 218/2013/ND-CP, new investment projects in economic zones receive a tax exemption for four years and a reduction of 50 per cent on tax payable for the next nine years. This is highly advantageous compared to other IPs. In addition, local authorities have made greater efforts to create the best conditions possible for investors by reducing delays in site clearance and investment licensing.

Hai Phong has prioritized public-private partnership (PPP) developments in infrastructure at industrial zones, economic zones, and seaports, port logistics services, and commercial infrastructure. As at the first quarter of this year, Hai Phong had 32 seaports, including four international seaports, of which one is a deep-water port: Tan Vu - Lach Huyen. The government has approved over $268 million to finance eleven key road infrastructure projects carried out in 2019 and 2020.

Two IP’s were launched in Hai Phong at the beginning of 2018. Key land supply set to accommodate expected interest include Deep C Phase 2 and 3 as well as the Nam Dinh Vu Industrial Park. Future supply includes the Trang Cat Industrial Park, with infrastructure set to finish at the end of this year, and Nam Cau Kien Industrial Park Phase 2 in July 2019.

According to industrial cluster development planning to 2020 and vision to 2025, Hai Phong will have 12 new industrial clusters by 2020, raising the total land area to 1,080 ha, while achieving an occupancy rate of 70 per cent. By 2025, it is expected to increase to a total land scale of 1,377 ha and an occupancy rate of 80 - 90 per cent. Furthermore, according to the Foreign Investment Agency, Hai Phong attracted $3 billion in registered FDI in 2018, ranking it third nationwide.

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