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Vietnam welcomes a 'new generation' FDI wave, which industrial park real estate businesses will benefit?

According to Agriseco's assessment, the supply of industrial park real estate land across the country is growing slowly compared to current demand.


According to a recent industrial park real estate industry update report by Agribank Securities (Agriseco), data from the Ministry of Planning and Investment shows that the flow of foreign direct investment (FDI) into Vietnam is on the rise in a high growth direction. In the first quarter of 2024, total FDI capital increased by 13.4% over the same period last year, reaching 6.17 billion USD; Of which, newly registered FDI capital increased by 58%, reaching 4.77 billion USD.


Industrial park real estate businesses in Vietnam

According to a recent industrial park real estate industry update report by Agribank Securities (Agriseco), the Ministry of Planning and Investment data shows that the flow of foreign direct investment (FDI) into Vietnam is on the rise in a high growth direction. In the first quarter of 2024, total FDI capital increased by 13.4% over the same period last year, reaching 6.17 billion USD; Of which, newly registered FDI capital increased by 58%, reaching 4.77 billion USD.


In particular, realized FDI capital amounted to 4.63 billion USD - the highest level in the same period in the last 5 years. The production, processing, and manufacturing sectors continue to be the sectors attracting the largest investment capital. Some large projects include Hyosung's carbon fiber factory project, Trina Solar Cell's silicon production project, and Gokin Solar's photovoltaic silicon production project.



Industrial park real estate businesses in Vietnam

Meanwhile, the supply of industrial parkland across the country is growing slowly. According to Agriseco, by 2023 the country will have 16 new industrial park projects, bringing the total number of established industrial parks to 416, of which the number of industrial parks in operation is 296 projects, an increase of only 3 projects compared to 2022. Increase This is lower than in previous years due mainly to problems in the land clearance compensation process and legal procedures.


Industrial park real estate businesses in Vietnam

According to Agriseco's assessment, new FDI capital flows into the Industrial Park are expected to continue to grow positively. First, this is the recovery of capital flows from traditional partners Korea and Singapore thanks to improved economic growth forecasts for 2024. Second, the trend of shifting capital flows from China to neighboring countries is still happening.


Third is the "new generation" FDI wave (high technology, electric vehicles, renewable energy, semiconductors) emerging as a global trend. In which, Vietnam is one of the suitable destinations thanks to participating in 16 FTA agreements, upgrading comprehensive strategic partnerships with the US, Japan, Australia, and Korea; and NetZero's early commitment policies; and policy mechanisms to attract capital into new fields). Vietnam continues to hold the 3rd position in attracting the most FDI capital inflows in ASEAN in recent years.


Currently, a series of large corporations Samsung, LG, Foxconn, Amkorm Intel, and Nvidia... all continue to expand investment, committing to expanding production facilities in Vietnam in the near future, focusing on the fields of semiconductors and AI. , electronic…


Agriseco also estimates that in the first quarter of 2024, FDI projects new/increased commitment to investment and expansion of operations. Rental demand is increasing in level 2 provinces such as Vinh Phuc, Ha Nam, Quang Ninh, Bac Giang, Tay Ninh, and Vung Tau thanks to lower land rental prices than central provinces/cities and promoting infrastructure development. The Northern region forecasts an increase in tenants from China in the industrial manufacturing sector (semiconductors, electronics); The southern region mainly focuses on production, export, and consumption.


Industrial park real estate businesses in Vietnam

Based on current market conditions, CBRE forecasts that industrial park land rental prices in the North will maintain a growth of 5-9%, and the South is estimated to increase by 3-7% in the period 2024 - 2026, creating Favorable conditions for business activities of enterprises developing industrial parks. Notably, the rental price of industrial parks in Vietnam is still 15-20% lower than in other countries in the region (Indonesia, Malaysia,...), creating favorable conditions to attract investment capital flows.


However, in addition to the advantages, Agriseco also points out challenges for industrial park real estate businesses in the coming time. First is the global minimum tax rule that affects the need to attract FDI capital into Vietnam. This is an agreement with the participation of more than 140 countries with a minimum tax rate of 15% for multinational corporations with total revenue of 750 million euros (~19,000 billion VND) or more.


The second is infrastructure difficulties, associated infrastructure investment costs such as electricity shortages, and waste treatment systems. Third, the new supply in 2024 is limited, concentrated in the Northern region. Agriseco forecasts that the new supply for lease in 2024 will still be limited due to some problems with site clearance compensation and legal procedures.


With the above factors, Agriseco forecasts that the 2024 business results of industrial park real estate businesses will continue to grow but will be more clearly differentiated.


Industrial park real estate businesses in Vietnam

According to Agriseco's assessment, Kinh Bac Urban Development Corporation (KBC), IDICO Corporation (IDC), and Sonadezi Chau Duc (SZC) will be the listed enterprises that benefit the most from the "worldwide" FDI wave. new system".


As for Kinh Bac Urban Area, this company's land is located in localities where many of this company's projects are concentrated such as Bac Giang, Bac Ninh, and Hai Phong... which are also localities that attract the largest FDI capital in the country. Kinh Bac Urban has signed a Memorandum of Understanding (MOU) to lease 30 hectares of land in 2023 and most of the MOUs will soon be converted into official contracts. In addition, the company's Trang Due 3 industrial park (Hai Phong) is currently expected to be approved for investment in the second half of the year.


In the medium and long term, Kinh Bac Urban has a land fund of more than 2,400 hectares, an increase of 675 hectares thanks to the implementation of new projects in Phu Binh, Tan Tap, Nam Tan Tap industrial parks, etc. These projects are all located in provinces attracting high FDI capital stretching from North to South.


As for IDICO Corporation, this enterprise owns a land fund of up to 3,200 hectares, and nearly 600 hectares of commercial land ready for lease, concentrated in provinces that attract a lot of FDI capital such as Long An, Vung Tau, and Bac Ninh. Ninh. By the end of 2023, Idico's signed MOU and unrecorded rental land area is about 156 hectares with rental prices this year expected to increase by 5-10%.


Currently, Idico plans to develop an additional land fund of about 2,000 - 3,000 hectares in the provinces of Ba Ria-Vung Tau, Tien Giang, and Hai Phong to create motivation for long-term growth.


For Sonadezi Chau Duc, rental prices in Chau Duc Industrial Park this year are expected to increase by about 10 - 15% compared to 2023 and the absorption rate is expected to increase thanks to the advantage of lower rental prices compared to other industrial parks. other businesses in the same area; At the same time, infrastructure is being strongly improved when the Bien Hoa - Vung Tau expressway is gradually completed.


Accordingly, Sonadezi Chau Duc is expected to lease about 35 - 40 hectares of industrial park land this year thanks to Ba Ria-Vung Tau being one of the provinces attracting the highest new FDI capital in the country. Currently, this enterprise has a large commercial land fund including 700 hectares of industrial park land and 250 hectares of urban land in Vung Tau. Accordingly, the next 3 - 5 years will be the point where Sonadezi Chau Duc's profits fall when it records revenue from both industrial park and urban area segments.


(Markettiomes)


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