Vietnam North prime logistics stock set to more than double in 2024 | Real Estate Asia
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Vietnam North prime logistics stock set to more than double in 2024

Total supply is expected to reach 1.4 million sqm.

Vietnam North is expected to welcome significant new industrial supply of 322,000 sqm. According to a JLL report, Core5 Hung Yen, SLP Park Thuan Thanh II, and Frasers’ projects in Yen Phong 2C, Yen Phong Extension and Yen My Industrial Park are among the significant projects. 

By the end of 2024, the total supply is set to reach 1.4 million sqm, 1.3 times the supply in 2023.

Here’s more from JLL:

Demand is gradually stabilising while supply continues to expand, making the market more competitive. In that context, landlords tend to apply a variety of strategies to promote leasing activities, such as updating the purpose of properties, diversifying functions into both warehouses and factories, or applying a preferential rental strategy to increase flexibility and capture demand.

Net absorption grows positively compared to 1H23

Modern RBW rental demand in 2H23 gradually stabilised after the bleak period of 1H23. Besides retailers, 3PLs and e-commerce, demand for modern warehouses has diversified with the participation of manufacturers and distributors. In addition, demand in 4Q23 also benefited from the year-end effect with higher shopping activity.

The second half of 2023 saw a significant increase in net absorption, recording modern RBW absorption of 175,800 sqm, mainly from new projects that entered the market in 2023. These were JD Logistics Park Hai Phong, SLP Park Nam Son Hap Linh, SLP Park Yen Phong and Mapletree Hung Yen Logistics Phase 3. Notable leasing transactions included LONGi Vina Solar and Foxconn at SLP Nam Son Hap Linh.

Supply levels off after three consecutive quarters of growth

The modern RBW Northern market welcomed a large amount of new supply with 132,300 sqm in 3Q23 from three new projects, but it was muted in 4Q23. Accordingly, the total stock reached 1.1 million sqm by end-2023. JD Logistics Park Hai Phong was JD Property’s first push into the Northern market, with 55,000 sqm mostly dedicated to e-commerce activity.

Modern RBW projects in the North are increasingly focused on sustainable, environmentally-friendly development with amenities to meet tenant needs. Specifically, some projects currently under construction are incorporating the use of solar streetlights, green materials, and are being developed in line with LEED standards.

Competitive prices of new projects lower average rent

The average rent of Modern RBW in the Northern market was recorded at USD 4.61 per sqm, per month, in 2H23. It was down 0.3% h-o-h, yet up 1.8% y-o-y due to competitive pricing in order to attract tenants for new projects. Meanwhile, the average rent on a project basis did not witness any notable changes.

In the investment market, An Phat Holdings acquired ACTIS’s 130,000-sqm warehouse in An Phat 1 IP, Hai Duong Province, while Khai Toan JSC and Boustead Singapore completed a transaction in KTG Yen Phong, Bac Ninh Province. The overall market yield in 2H23 fell marginally to 8.2% as capital value growth outpaced rent growth.

 

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

 

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