Industrial rents in Northern Vietnam up 5.5% in Q2

This is due to higher rents commanded by two properties in the area.

The asking rent of a modern ready-built warehouse (RBW) in the Northern Vietnam market increased slightly to USD 4.3 per sqm per month in 2Q22. 

This is an increase of 5.5% h-o-h which JLL attributes to the higher rent set by SLP in Hai Phong and the higher adjustment in monthly rent by Mapletree Hung Yen Logistics Park Phase 1, on account of the limited current available space, and increasing numbers of interested customers.

Here’s more from JLL:

The border opening and new supply entering the market have supported net absorption to improve significantly h-o-h. However, 2Q22 net absorption is still four times lower y-o-y because tenants’ cautious approach post-COVID continues to weigh on market sentiment.

Demand for warehouses was mainly driven by the expansion of retailers, 3PLs and e-commerce players. Facilities located in prime locations within 45-minutes of driving were still the most sought-after options for tenants.

Hai Phong records new supply

In the Northern market, Hai Phong is the destination of new Grade-A projects, namely SLP Hai Phong Phase 1 and BWID Deep C2, with a total area of 100,560 sqm. Thus, the total prime ready-built warehouse (RBW) area reached 535,570 sqm by 2Q22.

Given the new supply, vacancy rate temporarily increased to 22.1% in 2Q22. which indicates that there is sufficient supply to meet the area’s expanding demand.

Outlook: New investors to enter market with large scale projects

Developers continue to acquire land in the Northern area to develop RBW projects. Many large-scale projects developed by reputable investors are set to enter the market and most are still under construction. Accordingly, the Northern region’s modern RBW supply is expected to peak in 2H22. By end-2023, total RBW supply in the North is expected to be at least two times higher than the current level.

Foreign investors will look to Tier-2 localities, such as Vinh Phuc, Hai Duong, and Hung Yen, where there are still abundant land banks to strengthen their market foothold.

Note: Vietnam North Logistics & Industrial refers to the Vietnam North prime logistics market.