Viet Nam Industrial Real Estate Report 2021 – Current Status and Potentials for Development

The Covid-19 epidemic has greatly affected major economies in the world since it appeared in 2020. And Vietnam’s economy has not escaped this influence of the pandemic. Before the outbreak of the epidemic, in 2018 and 2019 Vietnam’s GDP continuously recorded a good growth rate (7.08% and 7.02% accordingly). In 2020, although the economy also was affected by the Covid-19 epidemic, Vietnam’s GDP still recorded a positive growth rate (2.91 percent), which is a remarkable achievement and effort of the whole country. Vietnam’s economy in 2021 started with the steadfastness thanks to increased demand from developed countries, the Government deploys to accelerate disbursement of public investment and stimulate investment and attract more domestic as well as foreign investment. The economy reached very good GDP growth in the second quarter of 2021 (6.61%).

However, the emergence of the 4th wave of Covid-19 starting from the end of April has taken a heavy toll on the country’s economy, causing serious damage to all economic sectors. Especially, in the third quarter of 2021, when the number of infections in many provinces and cities increased rapidly, the social distancing policy was applied in most major provinces and cities, Vietnam’s GDP in the third quarter of 2021 decreased 6.17% compared to same period of 2020, this is the lowest quarterly growth rate ever recorded from 2018 so far. In 2021, Vietnam’s GDP increased by 2.58% – the lowest growth rate since 2018.

The total value of foreign direct investment into Vietnam in the 12 months of 2021 reached 31.15 billion USD, increased 9.2% over the same period last year. In which, the value of newly registered capital and adjusted capital increased sharply compared to the same period last year, reaching USD 15.25 billion (up 4.1%) and USD 9.01 billion (increased 40.5%).

Continuing the trend from the beginning of 2021, the number of newly granted projects decreased by about 31.1% over the same period last year, but the total value of newly registered capital increased by more than 4.1%. If in the period of Q1 and Q2, although the number of newly granted projects decreased significantly, the newly registered capital increased sharply (> 16% compared to same period of last year), then in the 12 months, the value of newly granted capital increased only 4.1%. This shows that the trend of foreign investors who have registered to invest in large-scale projects still occurs from the beginning of the year to the end of 2021, but due to the complicated development of the Covid-19 epidemic in the third quarter of 2021 so by the end of the year, large-scale projects tend to increase but not as much as before.

Industrial Real Estate Development Status

After conducting a survey on the development status of industrial parks nationwide in 2021, we summarize and analyze the development of industrial parks and export processing zones by geographical region,  including North, Central, South.  In which, the expanded industrial park is counted by us as a separate industrial park, separate from the existing industrial park. Nationwide, a total of 366 Industrial Parks(1) have been put into operation with a total planning area of ​​92,686 hectares.  Through the survey of 355 industrial parks, the average occupancy rate (2) of industrial parks reached 81%.  However, if divided by regions, the occupancy rate of the Industrial Parks of the southern provinces is slightly higher than that of the North and Central regions.  In which, this rate in the Central region is the lowest.  Specifically, in 19 southern provinces and cities, the area of ​​industrial land is more than 45,000 hectares and the occupancy rate of industrial zones in the South reaches the highest average value in the region, with more than 88% of the total area industrial land has been filled.

Meanwhile, industrial land area and occupancy rate of Industrial Parks in the North are only slightly lower with more than 82% of the more than 32,000 hectares of industrial land occupied and this figure in the Northern region.  Central is just over 70% on nearly 15,000 hectares of industrial land, the lowest in the three regions.

Currently in Vietnam, mainly land for lease and ready-built factories are the two main types of industrial real estate. Industrial zones are also gradually diversifying into more industrial real estate products such as houses for experts, housing for workers, and living and dining areas, but not much. The type of ready-built factory has also emerged in recent years when the demand for renting factories is increasing. For the whole country, only 49% of industrial zones have ready-built factory products, and 51% of industrial zones currently do not have this type of industrial real estate. In which, the South has the highest concentration of industrial zones with ready-built factories (61% of IPs have ready-built factories), followed by the North (69% of IPs have ready-built factories, but the number is still less than in the South). ) and the Central region currently very few IPs deploy this type of real estate because in the Central region, currently mainly investors in agriculture and energy, the demand for renting factories is not much.

New industrial zones in 2021

In this section, we focus on analyzing industrial zones with investment policy, investment certificate and planning of 1/2000, 1/500 in 2021 (expanded IP is counted as a new IP). According to HOUSELINK’s data, in 2021, about 57 new Industrial Parks will be added nationwide. In which, the Northern region is added 38 zones, the South has 11 industrial zones added to the planning, while this number in the Central region is 8 zones. Both in quantity and in planned area, the new zones in the North account for the majority, showing that the supply in the Northern provinces is very ready to welcome new investment capital in the coming years.

Current Situation Off New Level FDI Projects in Industrial Parks In 2021

In 2021, there will be more than 500 new FDI projects with factories and headquarters in industrial zones in Vietnam. Industrial zones in the North in the past year were especially prominent, when more than 46% of newly registered FDI projects in the year chose IPs in the North as destinations, especially 63% of newly registered capital as well poured into industrial zones in the North and of more than 1000ha of registered industrial land, 49% is in the North. It can be said that although in 2021 the North of Vietnam will also be heavily affected by the Covid-19 epidemic, but with a quick recovery and effective Covid prevention strategies, industrial zones in the northern provinces had a quick recovery, attracting a lot of attention from investors.

In the South, we recorded the highest number of newly registered FDI projects in the country (48%) but the scale of the projects was not too large (27% of the total value of registered investment capital and 39% of the total investment capital) registered industrial land area). In the Central region, IPs only attract a small number of newly registered FDI projects with nearly 1 billion USD of total registered investment capital.

Some industrial zones attract many new FDI projects in 2021

This report is released in Vietnamese versionEnglish version.

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