APPD Market Report Article

Vietnam North

February 28, 2022

-1.5%

USD 4.18

Rents
Rising

RBW demand in Northern region recovers

  • Demand in major manufacturing hubs bounced back strongly as the market started to adapt to the Covid-19 pandemic. Positive demand, combined with new supply in the quarter, pushed the net absorption in 4Q21 to more than 191,000 sqm, a notably high level compared to the negative figure in 2Q21 and humble 3,000 sqm in the same period last year.
  • Demand for warehouses from e-commerce and retailers were key drivers, as the year-end season approached. Meanwhile, demand from manufacturers also surged owing to the recovery of manufacturing activities. New lease/transactions were recorded mostly in Mapletree Phase 4 and Phase 5 projects, with 28,000 sqm acquired by DHL and roughly 22,000 sqm acquired by Maersk.

New supply enters the market

  • Among new supply launched across provinces in the Northern area, Mapletree Bac Ninh and Hung Yen were the most notable projects, with a total area of 216,000 sqm. In Hai Phong, BWID, a rapidly growing ready-built property developer, introduced 88,000 sqm of RBW in Deep C and Nam Dinh Vu IP; and thus, the total prime RBW reached 517,000 sqm by end-4Q21.
  • Given the new supply, vacancy rate temporarily increased to 23.7% in 4Q21. This is the first time the North market recorded a double-digit vacancy rate since 2018, indicating that there is sufficient supply to meet the expanding demand expected in the region.

Average rents drop slightly

  • Asking rent of modern RBW in Northern area recorded at USD 4.2 per sqm, per month, in 4Q21, dropping 1.52% y-o-y, due to the lower-than-average rent quoted in Mapletree Hung Yen. As Hung Yen is the second-tier province, and Mapletree Hung Yen is the first modern RBW in the city, rent was lower compared to those in Bac Ninh and Hai Phong, dragging down the average rent slightly.
  • Market yield continued to compress since the market was more competitive with new players entering the market. As a result, despite a slight decrease in asking rent, capital value continued its upward trend.

Outlook: A vibrant market expected in 2022

  • With the introduction of well-known foreign players in RBW sectors, Northern region is expected to welcome nearly 423,000 sqm of modern RBWs by end-2022. Developers continue to acquire land in Northern area to develop RBW projects. Second-tier provinces, like Bac Giang, Quang Ninh and Hai Duong, have also become vibrant with a number of transactions in negotiation.
  • On the demand side, since the country reported a 9.2% y-o-y increase in total registered FDI by end-2021, despite the effects of COVID-19, manufacturers are expected to accelerate their expansion plans in 2022, resulting in a spike in RBW demand in 2022.
Note: Vietnam North Logistics & Industrial refers to the Vietnam North prime logistics market.

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