In 2021, the emergence of the new Covid variant has slowed down the global economic recovery. The pandemic also caused disrupt in global value chain, significantly increasing price of production materials, which is a significant challenge for production and business activities. Although facing many difficulties, Vietnam’s economy and industrial activities still made many achievements in the year 2021. Import and export activities continue to be the bright spot of the economy, with total value reaching US$668.5 billion, increasing 22.6% y-o-y thanks to previously passed FTAs.
The total FDI capital in 2021 reached US$31.15 billion, a growth of 9.2% y-o-y. Among 71 countries and territories with newly licensed investment projects in Vietnam in 2021, Singapore is the largest investor with US$6.11 billion, accounting for 40% of the total registered capital, followed by Japan with US$2.79 billion, accounting for 18.3%.
Notable FDI Projects in 2021:
| Project Name | Nationalities | Total Registered FDI (US$) | Location | Province |
|---|---|---|---|---|
| 3/2 Pharmaceutical | Singapore | 3.1 bilion | Dong Nam A IP | Long An |
| LG Display Hai Phong | Korea | 2.1 billion | Trang Due IP | Hai Phong |
| Polytex Far Eastern Vietnam Co., Ltd. Factory Project | Taiwan | 1.37 billion | Bau Bang IP | Binh Duong |
| O Mon II Thermal Power Plant | Japan | 1.31 billion | O Mon District | Can Tho |
| LEGO Group | Denmark | 1.0 billion | VSIP III IP | Binh Duong |
| Kraft Vina paper factory | Japan | 611.4 million | Binh Xuyen IP | Vinh Phuc |
Source: FIA Vietnam, Cushman & Wakefield
The FDI flow came from both newly registered sources and expanding sources. This demonstrated the investors’ firm commitment and positive belief in Vietnam industrial market. Notably, the FDI flow now not only focused on the key Northern and Southern key economic zones, but also spread out further into less developed but high potential areas such as Quang Tri, Nghe An and Ha Tinh.
HCMC INDUSTRIAL MARKET STATISTICS Q4 2021
*All prices are exclusive of VAT, US$/VND = 23,163; US$/€ = 0.884 as at 16 December 2021
| Submarket | Inventory(ha) | Vacancy Rate | YTD Overall Net absorption (ha) | Planned & Under construction (ha) | Overall Avg Asking Rent * | ||
|---|---|---|---|---|---|---|---|
| VND/sqm/term | US$/sqm/term | EUR/sqm/term | |||||
| West | 834 | 15.6% | 0 | 1,441 | 4,805,000 | 207.5 | 183.4 |
| North | 778 | 2.3% | 24.9 | 73 | 3,303,000 | 142.6 | 126.0 |
| South | 701 | 25.8% | 5.7 | 500 | 5,071,000 | 218.9 | 193.5 |
| East | 182 | 0.0% | 0 | 0 | 3,384,000 | 146.1 | 129.2 |
| HCMC total | 2,495 | 13.2% | 30.6 | 2,014 | 4,308,000 | 186.0 | 164.4 |
Source: Cushman & Wakefield
Market Supply & Occupancy: Total industrial stock in Ho Chi Minh City remained stable at approximately 2,500 ha. Occupancy rate was unchanged q-o-q and increased slightly 1 pp y-o-y to reach 87%, mainly due to the improvement of leased spaces at industrial parks in the northern. With a stable growth rate, an export-oriented economy, an increase in free trade agreements (FTAs), a young workforce, preferential investment policies and strategic geographical location, Vietnam continues to be an attractive destination for industrial real estate investors. Additionally, in the current context, Vietnam has implemented decisively a crucial policy “Living with Covid-19”, instead of “Zero Covid-19” that makes industrial market more positive.
HCMC significant projects planned & under construction Q4 2021
| Property | Submarket | Size (ha) | Completion date |
|---|---|---|---|
| Pham Van Hai | Binh Chanh | 768 | 2023 |
| Hiep Phuoc – Phase 3 | Nha Be | 500 | 2023 |
| Le Minh Xuan 3 – Phase 2 | Binh Chanh | 338 | 2023 |
| Vinh Loc 3 | Binh Chanh | 200 | 2023 |
Source: Cushman & Wakefield
Rental Level Continued Trending Upwards: Average asking rent in HCMC achieve VND4,308,000/sqm/term, equivalent to US$186.0/sqm/term, rose by 1% q-o-q and 3% y-o-y, mainly due to limited available supply and rising demand. The overall rental level remained the highest nationwide, 31% higher than Hanoi’s, 35% higher than Long An’s, 72% higher than Binh Duong’s, 79% higher than Dong Nai’s and nearly double the rate at Ba Ria - Vung Tau.
HANOI INDUSTRIAL MARKET STATISTICS Q4 2021
*All prices are exclusive of VAT, US$/VND = 23,163; US$/€ = 0.884 as at 16 December 2021
| Submarket | Inventory(ha) | Vacancy Rate | YTD Overall Net absorption (ha) | Planned & Under construction (ha) | Overall Avg Asking Rent * | ||
|---|---|---|---|---|---|---|---|
| VND/sqm/term | US$/sqm/term | EUR/sqm/term | |||||
| Thach That – Quoc Oai | 705 | 26.4% | 20 | 500 | 2,620,000 | 113.1 | 100.0 |
| Me Linh | 344 | 0.0% | 0 | 266 | 4,169,000 | 180.0 | 159.1 |
| Dong Anh | 274 | 0.0% | 0 | 300 | 2,780,000 | 120.0 | 106.1 |
| Soc Son | 182 | 3.8% | 0 | 540 | 3,690,000 | 159.3 | 140.8 |
| Chuong My | 170 | 0.0% | 0 | 225 | 4,401,000 | 190.0 | 168.0 |
| Gia Lam | 97 | 0.0% | 0 | 0 | 3,938,000 | 170.0 | 150.3 |
| Tu Liem | 30 | 0.0% | 0 | 200 | 4,169,000 | 180.0 | 159.1 |
| HANOI TOTALS | 1,802 | 10.8% | 19.6 | 2,031 | 3,295,000 | 142.3 | 125.8 |
Source: Cushman & Wakefield
Market Supply & Occupancy: Total industrial stock in Hanoi remained at over 1,800 ha, unchanged q-o-q and y-o-y. Occupancy held steady q-o-q but increased 1 pp y-o-y to 89%. Most existing projects were either fully occupied or had limited space for lease. With favorable government incentives, competitive labor costs, a stable political environment, positive economic outlook and free trade agreements, Vietnam has become favored by foreign investors moving out of China.
Hanoi Significant Projects Planned & Under Construction Q4 2021
| Property | Submarket | Size (ha) | Completion date |
|---|---|---|---|
| HANSSIP Phase 2 | Phu Xuyen | 768 | 2023 |
| Phu Nghia Phase 2 | Chuong My | 500 | 2023 |
Source: Cushman & Wakefield
Rent Performance: Hanoi average asking rent achieve VND3,295,000/sqm/term, equivalent to US$142.3/sqm/term, remained stable q-o-q but increased by 1% y-o-y due to rising rents at existing industrial parks with limited available land for lease. The average rent for industrial land in Hanoi remained the highest among the Northern provinces, at 71% higher than Hung Yen, 48% and 50% higher than Hai Phong and Bac Ninh respectively.
Over the longer term, many companies will seek to redesign their supply chains. Some manufacturers have already begun expanding their operations in new markets to help diversify production. More advanced markets will likely benefit from reshoring of key, ‘mission critical’, elements of the supply chain. On a broader front, the growth in intraregional trade in Asia, due to consumers across the region consuming more of the goods manufactured in the region, will drive new investment opportunities in manufacturing and logistics infrastructure. The period ahead in 2022-2023 will be a great opportunity for Vietnam in industrial segment.