APPD Market Report Article

Vietnam South

February 28, 2022

10.5%

USD 4.57

Rents
Rising

RBW demand recovers slightly in 4Q21 following a subdued 3Q21

  • After a quarter of softening demand due to the strict lockdown in 3Q21, the Southern market warmed up in 4Q21 as year-end peak season approached. As the market developed, demand for built-to-suit (BTS) warehouses expanded in addition to the traditional ready-built warehouse, which was demonstrated by new BTS supply in Tan Duc IP (Long An province) and Phu Tan IP (Binh Duong province).
  • E-commerce players and retailers were active in Tan Phu Trung IP in HCMC, with Shopee acquiring 3,000 sqm and Masan and The Gioi Di Dong (retailers) negotiating the deals. In Dong Nai, J&T Express (a last-mile delivery firm) also acquired 10,000 sqm in Ho Nai IP. In Binh Duong, LF Logistics signed a lease with Mapletree Binh Duong for a 15,000-sqm warehouse.

New supply recorded in HCMC and Binh Duong

  • Despite being hit strongly by COVID-19 in 3Q21, the market gradually recovered in 4Q21, with the introduction of new supply in Binh Duong and HCMC. Total new supply stood at 302,000 sqm, all of which were developed by BWID, one of the most notable ready-built industrial properties in Vietnam.
  • The total supply of modern RBW in the Southern region stood at 953,000 sqm as of 4Q21, with BWID dominating supply and accounting for up to 45% of total stock.

Rents increase for the year-end peak season

  • Southern area recorded asking rent of modern RBW at USD 4.57 per sqm, per month, in 4Q21, increased by 3.9% y-o-y. This was due to the high-asking rent of new supply in HCMC.
  • Yield compressed slightly since existing investors are continuing to opt for investment opportunities amid the pandemic to meet potentially expanding RBW demand in 2022 and beyond, when manufacturing activities are expected to mostly resume. As a result, the capital value will also increase slightly .

Outlook: Occupier demand expected to pick up

  • Southern region is expected to welcome nearly 508,000 sqm of modern RBWs by end-2022, with many new players entering the market; namely, SLP-GLP and Cainiao in Long An, or KCN projects in Dong Nai. Many new developers – which are originally residential developers – are also eyeing opportunities to expand into the industrial market, of which RBW is one of their considerations.
  • Looking on the demand side, after the prolonged lockdown in 3Q21, the Southern market has been adapting to the “new normal”. With the expected post-COVID-19 reopening in 2022, demand for RBW is set to resume and rebound strongly in 2H22.
Note: Vietnam South Logistics & Industrial refers to the Vietnam South prime logistics market.

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