Breakthrough opportunities of Viet Nam's Industrial Real Estate Market - Delco Construction

Breakthrough opportunities of Viet Nam’s Industrial Real Estate Market

Although Real Estate is one of the sectors most affected by the Covid-19 pandemic, the industrial real estate segment shows positive signs of a breakthrough, thanks to FDI investors’ demand to expand or set up new factories after the pandemic.

The excitement wave of industrial land lease

CBRE Vietnam’s real estate market report shows that, as of the third quarter of 2020, the average occupancy rate of the industrial park remained at a positive level of 78%. According to the report of the Economic Zone Management Department (Ministry of Planning and Investment), as of the end of March 2020, the total industrial land area of Vietnam is about 66.1 thousand hectares.

Along with the existing industrial land fund being gradually filled, the land rental price is also increasing, the average rental price is 106 USD / m2 / rental cycle (up nearly 10% compared to the same period in 2019) ( According to the report of Jones Lang Lasalle Vietnam Company).

Table: Summary of rental prices for industrial zones in Vietnam by 2020
(Unit: USD / m2 / rental cycle)

Bang tong hop gia thue dat khu cong nghiep cac tinh thanh Viet Nam

(Source: CBRE Việt Nam)

Many economists believe that the wave of relocating factory and production activities away from China is continuing. With the stable political and economic between the Covid-19 pandemic and the advantage of young, low-cost labor, Vietnam remains a promising destination for investors.

Breakthrough opportunities of Viet Nam's Industrial Real Estate Market

Industrial real estate rental process

Understanding the land lease process and implementing investment projects in Vietnam will help investors proactively implement and secure their projects.

According to Article 149 of the Vietnam Land Law 2013, the following subjects are allocated or leased land in industrial zones by the state:

  • – Economic organizations
  • – Vietnamese people residing overseas
  • – Foreign-invested enterprises

In Clause 1, Article 51 of Decree 43/2014 / ND-CP stipulates, the duration of land use in industrial parks, export processing zones, industrial clusters or craft villages is according to the project duration but must not exceed 70 years.

The process of leasing industrial real estate depending on policy in each industrial zone with the different regulations and guidelines, but there are basically 4 steps:

Step 1: Prepare application for land lease according to instructions of industrial parks; Sign contract on land deposit. This is also a stepping stone for investors to have time to prepare documents and plans to apply for investment licenses in Vietnam.

Step 2: The People’s Committee of the district where the industrial park is located and the Management Board of the industrial park shall examine the file, guide the completion of the application and issue the land allocation or lease license;

Step 3: Sign the official land lease contract.

Step 4: The lessee pays the remaining rent.

Source: Finance magazine in May 20, 2020