Industrial Factories in Southern attract customers
Wednesday, 03/01/2024, 15:40 GMT+7
With the leasing area in the third quarter of 2023 reaching 143,000m2, increase 2.4 times compared to the second quarter of 2023, the southern industrial factory market is attracting quite good investment capital. Many industrial parks (IPs) have prepared supply to welcome FDI capital shifting to Vietnam.
According to Cushman & Wakefield, the demand for ready-built factories in the South is diverse, coming from many industries such as textiles, chemicals, electronics, …. In the third quarter of 2023, factories for rent in Dong Nai, Binh Duong, Ba Ria - Vung Tau, Long An achieved the highest absorption rate. Of which, Dong Nai leads with nearly 60% of total absorption.
Average occupancy rate reaches 74%
Currently, the occupancy rate of industrial factories for rent in the South is 74%, the average rental price is 4.7 USD/m2/month. Most projects keep the rental price unchanged, the rental locations with high demand such as Dong Nai and Ba Ria - Vung Tau have the highest growth rate year-on-year, about 2.5%.
Factory for rent in Chau Duc Industrial Park (Ba Ria - Vung Tau)
In the positive market trend, some industrial park infrastructure companies have achieved a fairly high factory occupancy rate. For example, the factory for rent in the industrial parks of Sonadezi Corporation and some member company has been 92% filled, attracting about 130 million USD in FDI capital and 720 billion VND in DDI capital.
According to observations, in localities with little industrial land, the projects attracted recently are mostly factory rentals. Partly because there is no longer a large land fund, partly because these provinces already have thousands of existing FDI projects, are large markets and have a lot of potential for businesses to join the supply chain for supporting products.
In Dong Nai, 33 IPs have leased 6,024 hectares, reaching nearly 86% of the land area that can be leased. As of November 2023, Dong Nai has attracted about 1.037 billion USD of FDI capital, reaching 148.2% of the 2023 plan and attracted about 2,643 billion VND of domestic capital, reaching 132.15% of the year plan. The leased area from the beginning of the year to date is 24.73 hectares, the projects mainly rent factories for production and business.
Factory for rent in Thanh Phu Industrial Park (Dong Nai)
According to the report of the People's Committee of Ba Ria - Vung Tau province, in the first 10 months of 2023, newly licensed FDI projects in the province reached a total registered capital of more than 751 million USD, an increase of 2.78 times over the same period in 2022; projects adjusted to increase capital by 503 million USD, an increase of 15.3% over the same period in 2022.
To anticipate and be ready to meet customers' needs for factory rental, some industrial parks in Ba Ria - Vung Tau have promoted the factory rental segment. For example, in Chau Duc Industrial Park, in addition the industrial land for rent, the investor has reserved hundreds of hectares of land to attract secondary investors to build factories for rent. Since the beginning of the year, Chau Duc Industrial Park has attracted 7/20 new FDI projects in Ba Ria - Vung Tau and 9 FDI projects have adjusted to increase capital, including some projects renting or factory transferring.
Chau Duc Industrial Park spent large land fund to attract secondary investor constructing factory for rent
Large-scale and intensive investment
The market for factory rental in the South has been formed for nearly 20 years. Since the late 2000s, some existing industrial parks have started to build factories for rent to diversify products and meet customer needs. Many new industrial parks have planned factory rental zones from the beginning.
It is known that Long Thanh Industrial Park is the pioneer in developing factories for rent since 2007. Currently, the investor of Long Thanh Industrial Park is also the leading large-scale specialized factory developer in the South. Up to now, this company has built and rented 68 factories, attracted investment capital of more than 90 million USD and is expected to exploy about 100 factories in the period of 2023 - 2025.
Cluster of factories for rent in Long Thanh Industrial Park
Dong Nai Industrial Zone Authority (DIZA) said that currently many industrial parks in the province are leasing industrial factories such as Giang Dien Industrial Park, Thanh Phu Industrial Park, Ho Nai Industrial Park, Long Thanh Industrial Park, Nhon Trach 3 Industrial Park... The rate of filling up factories is quite fast, especially in industrial parks with good locations and convenient traffic connections.
“Investors also tend to choose products from professional and experienced factory development company and require that the delivered products meet technical standards, construction quality, have full legal documents and are synchronously connected to the industrial park infrastructure,” said a representative of the DIZA.
Sharing the same opinion, the investor of Giang Dien Industrial Park said that due to meeting the criteria of location, standards and quality, 25 factories in Giang Dien Industrial Park quickly found tenants with long-term contracts. In the coming time, Giang Dien Industrial Park will continue to build and lease 37 factories (total area of nearly 38 hectares), each factory is about 5,000m2 or more.
Giang Dien Industrial Park in Dong Nai Province rented 25 factories
Besides pre-built industrial factories, investors are currently promoting the buit – to – suit factories. In particular, some company have built specialized factories, suitable for each customer's industry. As one of the first units to deploy this type of factory, Sonadezi Long Thanh Company said that the advantage of a factory built according to customers' characteristics is the flexible design according to production needs, suitable for the production line, helping customers maximize capacity. Up to now, the Company has deployed many specialized factories according to the requirements of customers such as PDMM, Samtec Vietnam...
Samtec Vietnam Co., Ltd. said that in 2017, the Company rented 2 adjacent pre-built factories in Long Thanh Industrial Park and recently rented another factory built according to the its production characteristics. With the third factory built on a land area of 13,800m2, Samtec ordered the investor to design and build a complete production area with an area of about 8,000m2, four times larger than the area of the pre-built factory, the office area (1 ground floor, 1 upper floor) about 2,000m2.
Mr. Gan Yee Chun, General Director of Samtec Vietnam shared: “After 5 years of renting a factory in Long Thanh Industrial Park to produce electronic components and connecting cables, Samtec Vietnam is now growing well and expanding its scale. Samtec Vietnam Co., Ltd. is honored to be voted as one of the best places to work in Asia in 2023”.
Sharing about the model of factory built according to customer needs, the investor of Thanh Phu Industrial Park said: “With the type of built – to – suit factory, we can advise customers on optimal design and construction solutions in terms of space, function, cost. Currently, the model of factory built according to the new trend, which can be divided into 2 separate factories, fully integrating auxiliary works and internal premises such as offices, canteens, parking lots, security houses, ... is the most interested model for customers”.
It is forecasted that by 2026, the total supply of industrial factories in the southern provinces will increase about 2.5 million square meters. This is a new driving force for the market, especially in the context of increasingly scarce industrial land available for lease, industrial parks in the South have reached an average occupancy rate of 82%, while new industrial parks need a lot of time to complete procedures.
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