Auto industry revs up industrial real estate in Vietnam
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Industrial real estate developers have been reaping the benefits of the investment surge into Vietnam’s automobile industry. Over the past three years, auto producers from Europe, the U.S. and Asia have been increasingly renting out industrial space and manufacturing facilities in Vietnam, giving real estate developers a significant boost.
This is the conclusion drawn by a recent report by real estate service firm CBRE Vietnam which evaluates the impact of growth of the Vietnamese automobile industry on the industrial real estate market.
The report notes that Camoplast Solideal from Luxembourg has rented 70,000 square meters of land to open a tire factory, and Schaeffler from Germany, 55,000 square meters to develop production facilities.
Mercedes from Germany has rented 5,500 square meters of land to open a distribution center, while Bentley from the United Kingdom has rented 5,000 square meters for a showroom and service center.
Yazaki of Japan has rented 39,000 square meters for electric car cable production, and Mogul Federal from the U.S. 5,000 square meters to make seats.
The CBRE report says that although Vietnam’s car manufacturing sector may be behind some other ASEAN countries, the consolidation of cleared land allocated for automobile production is increasing.
For both foreign and domestic producers, manufacturing facilities are mainly clustered in the north. Auto producers tend to choose this area to rent industrial land, the CBRE report says.
Due to higher demand for industrial land, rentals have increased, recently.
At an industrial park in southern province of Dong Nai, the price to rent industrial land for long-term leases of up to 50 years reached $90 per square meter last month, up from $60 to $70 last year.
The average rent of industrial land in northern Vietnam hit $82 per square meter per lease term in Q3, an increase of nearly 9 percent compared to Q1, according to a report by real estate service firm Jones Lang LaSalle (JLL).
Hanoi’s average rents increased significantly to $137 per square meter per lease term, the highest in the north, driven by limited supply.
There are only 358 businesses in the auto industry in Vietnam compared to 2,500 in Thailand, according to the Ministry of Industry and Trade, and observers have said that the potential for growth is high.
Questions & Answers
Q.Which specific companies have recently rented industrial space in Vietnam?
Which specific companies have recently rented industrial space in Vietnam?
Camoplast Solideal, Schaeffler, Mercedes, Bentley, Yazaki, and Mogul Federal have all rented industrial space. Their activities range from tire and component factories to distribution and service centres.
Q.What is the current state of Vietnam's car manufacturing sector compared to other ASEAN countries?
What is the current state of Vietnam's car manufacturing sector compared to other ASEAN countries?
Vietnam's car manufacturing sector may be behind some other ASEAN countries in terms of the number of businesses. However, the consolidation of cleared land for automobile production is increasing, indicating potential growth.
Q.Has the cost of renting industrial land in Vietnam changed recently?
Has the cost of renting industrial land in Vietnam changed recently?
Yes, rental prices have increased due to higher demand. In Dong Nai, prices rose from $60-$70 to $90 per square meter in a year. Northern Vietnam saw an increase of nearly 9 percent in Q3 compared to Q1.
Q.Where are most manufacturing facilities for auto producers located in Vietnam?
Where are most manufacturing facilities for auto producers located in Vietnam?
Manufacturing facilities for both foreign and domestic auto producers are mainly clustered in the north of Vietnam. Auto producers tend to choose this area when renting industrial land.