APPD Market Report Article

Vietnam South

August 26, 2022

Trang Le, Head of Research, Vietnam

1.7%

USD 4.33

Rents
Rising

FDI and domestic consumption recover

  • The reopened economy and flexible adaptation to living with COVID-19 have facilitated the recovery of FDI and domestic consumption. The demand for logistics space has therefore also increased following the rapid expansion of 3PL companies, e-commerce players, and retailers.
  • Vacancy rate moderately increased due to new supply recorded, reaching 32.5%. However, the market still maintained a strong sentiment as shown by the positive net absorption.

Binh Duong and Long An records new supply

  • Mapletree has launched the last two phases of the Mapletree Logistics Park Binh Duong project – Phase 4 and Phase 6 in VSIP II industrial park, with a total area of 125,000 sqm. Cainiao, Alibaba’s logistics arm, also marked its first presence in the Southern market with 111,888 sqm of modern ready-built warehouses (RBWs) in Phu An Thanh industrial park, Long An province.
  • Total supply of modern RBW in the Southern region stood at 1,132,321 sqm as of 2Q22, of which Mapletree and BWID dominated, accounting for 36% and 32% of total stock respectively.

Rents remain stable owing to competitive offers of new supply

  • The Southern area recorded asking rent of modern RBW at USD 4.4 per sqm per month in 2Q22, a slight increase of 0.8% y-o-y. Rents remained stable owing to competitive offers of new supply to increase occupancy rate.
  • BWID expanded their presence in the Long An market with two land acquisitions in Xuyen A and Vinh Loc 2 industrial park. Cainiao continued to diversify their RBW portfolio with their new project planned in Dong Nai.

Outlook: Facilities located in prime locations are sought after

  • The Southern region is expected to welcome more than one million sqm of modern RBWs in the next 12 months with the entry of new players into the market, namely SLP/GLP, Emergent Capital Partners, KCN Vietnam, Frasers Property, JD Property and LOGOS. The market share of modern warehouses is expected to expand gradually thanks to rapid involvement of international developers.
  • More time is required for the market to absorb the supply boom in 2H22 and early-2023, amid stable rents. Facilities located in prime locations within a 45 minute drive from the CBD are still the most sought-after options for tenants despite the higher rental rate.

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

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