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Industrial land for lease in Vietnam

Wednesday - 19/06/2019 10:06
Vietnam has released a recent report on "Industrial land for lease” market in Vietnam, particularly in Southern Region.
Industrial Land and Leasing Term in Vietnam
Industrial Land and Leasing Term in Vietnam
There are three key reasons help attracting more investments are low cost, strategic location and stable economic growth, making Vietnam as a magnet for FDI.

According to the development plan, by 2020, the total area of land devoted to industrial development will double the current market size.

Therefore, the opportunity to own land funds to penetrate and develop in this potential field is great for both existing and potential investors in the future. Vietnam's industry has many opportunities to rise in the emerging market race.

Investors should calculate all costs when deciding to lease land for build warehouse in Vietnam.

Set up a warehouse in Vietnam industrial park is not a small deal, from finding a suitable location to calculate all costs to make sure the most effective investment. Certainly this is always difficult decisions for investors because there are many industrial parks in Vietnam.

Price normally is the first thing that investors pay attention to build warehouse in Vietnam. In contrast, the cost of renting land occupied about 20% of total investment. This means the number is not significant if you only compare the rent to determine the effective investment.

According to survey data of investment consultants in Vietnam industrial zone, land rental in industrial zones of Binh Duong, Dong Nai, Long An have rent rates that is from 70 USD / m2 to 100 USD / m2 depending on location of industrial zone in Vietnam, infrastructure and investor support services ... If your decision is just based on the rent without calculating other related costs, the investor will inevitably have an ineffective project.

One example compares the choice between two warehouse in vietnam industrial parks (not mention location of industrial zones, infrastructure, customer service ...)
• Industrial Park A: Lease price is 70 USD / m2, 40 years, infrastructure cost is 0.07 USD / m2 / month.
• Industrial Park B: Lease price is 100 USD / m2 with 40 years, infrastructure cost is 0.035 USD / m2 / month.

For example, if you need to rent an area of 5000 m2 to build warehouse in Vietnam:
1. Investor chooses IP A, the cost: land rent 350,000 USD + infrastructure management fee of 40 years 168,000 USD = 518,000 USD.
2. Investor chooses IP B, the cost is: land rent 500,000 USD + infrastructure management fee of 40 years is 84,000 USD = 584,000 USD.

Thus, if you only count the additional cost of infrastructure management, you will see the difference between the investment cost of industrial zones with 70 USD and industrial zones with 100 USD is very small.

In addition, the cost of infrastructure management is very simple for this comparison, investors should pay more attention related others such as water treatment costs, water prices. This will produce accurate results from the problem of industrial land rent.

The above example is just a comparison of land rents between two industrial parks. But it did not analyze the quality of infrastructure. This is the most important factor in determining the value of industrial parks, the comparison of rents and the quality of infrastructure will be shown in the next consultation.

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