HO CHI MINH CITY – 22 May 2020 –
During the COVID-19 outbreak in Vietnam, the evolvement of e-commerce together with delaying export and import activities, due to disrupted transportation activities, have accelerated demand for warehouse. On contrast, the number of leasing enquiries of other industrial properties dropped due to travel ban and social distancing.
In the last two years, Vietnam ready-built factory and warehouse market were positive with strong supply growth and stable performance. Despite negative impacts from COVID-19, rental rates of ready-built factory stay unchanged. Ms. Thanh Pham, Associate Director, CBRE Research & Consulting, commented: ”It is expected that by the end of 2020, total supply of ready-built factory and warehouse in the North will reach 2.0 million sqm (up 25.3% y-o-y). Total supply of ready-built factory in the South will be 2.7 million sqm (up 28.2% y-o-y). After the pandemic contained, average asking rent of warehouse will increase by 4% to 11% y-o-y.”
According to Mr. Hieu Le, Director, CBRE Industrial Leasing Services: ”Vietnam ready-built factory and warehouse market is expected to continue to gather momentum in coming years. Demand for warehouse has been mainly driven by e-commerce companies who are expanding their storage space and distribution network. In addition, more investors/developers are actively seeking for site to develop logistics facilities. Niche industrial and logistic assets will also benefit in long term, with growing consumption and distribution of groceries and fresh foods set to accelerate occupier demand for temperature-controlled storage (cold or cool storage warehouse). In the context of limited industrial land supply, high-rise warehouse has been introduced to create bigger storage space for the needs of e-commerce companies.”
The pandemic added impetus on manufacturers and governments to plan to reduce supply chain dependency on China (and potentially any other single market). This will form part of overarching theme of a move away centralised supply and towards greater diversification – a trend likely to benefit Vietnam. During this difficult time, developers of industrial parks and ready built factories have offered supporting policies, including reductions of rents and infrastructure maintenance fee (from 10% to 30%), restructuring the payment term and exempting rent for new businesses setting up factories during an outbreak.
It is time for a critical makeover of Vietnam industrial property market. The ready-built warehouse and factories, in particular, are evolving very quickly to take advantage of this golden opportunity. Robust demand for ready-built factories include new factory set up and expansion. More recently, developers have been constructing ready-built factories and warehouses to maximise efficiency of land usage and cater to the full spectrum of demand.
The modern generation of ready-built factory, so-called "Ready-built factory 4.0", integrated 4.0 technologies to bring more convenience to occupiers in the process of leasing, manufacturing and operating, is emerging as a new trend. Ready-built factories 4.0 apply virtual reality technology to bring their factory spaces to clients at any time and anywhere. The service package includes legal, human resources and free accounting system so that clients can apply for licenses even when they are overseas. With the generation of ready-built factory 4.0, the model of KTG Industrial is pioneering in meeting rental needs in this ”new normal” situation.