In contrast to the gloomy climate of the high-grade apartment market, property business operations at industrial zones (IZs) are bustling due to demand fueled by increasing flow of foreign investments.
Industrial and Logistics Manager of the property services provider CBRE Vietnam David W. Neal said foreign investors have great demand for land and workshop lease. Most industrial and export processing zones (EPZs) in southern economic hubs such as Ho Chi Minh City, Dong Nai and Binh Duong have nearly 100 percent of land occupied.
The growing demand has pushed up the land rent at IZs by 30-50 percent compared with a year ago. Land rent at the Tan Thuan EPZ is the most expensive at 100 USD/sq.m/year, followed by the Tan Binh, Linh Trung (HCM City) and Vietnam-Singapore IZs (Binh Duong). Workshop rent is also escalating, particularly at the Amata IZ in Dong Nai and other IZs in HCM City .
According to the Deputy General Director of the Cu Chi Industry and Trade Investment and Development Company, Dang Ngoc Thanh, the investor of the Tay Bac Cu Chi IZ, most foreign-invested businesses want to lease land at IZs regardless of high rents because they insist on good services, simple lease procedures and tax incentives.
In response to the demand, a series of IZs including Tan Tao, Vinh Loc, Tan Phu Trung and Tay Bac Cu Chi, have confirmed they will expand their acreages.
CBRE Vietnam forecast that the IZ real estate market will continue to witness busy operations in the coming years because Vietnam has emerged as an attractive destination for foreign investors.
Statistics released by the Ministry of Planning and Investment showed that Vietnam attracted close to 7.6 billion USD in foreign investment in the first four months of the year, a year-on-year rise of 41 percent, with property development topping the list in terms of lured capital.
Deputy Director of the Urban Research and Infrastructure Development Institute Nguyen Dang Son said the government is paying due attention to infrastructure development at IZs and EPZs. Land areas for IZs and EPZs are projected to increase by 65,000 ha in 2010 and 80,000 ha 10 years later.
An additional 113 new IZs will be built, mainly in the southern provinces of Binh Phuoc, Tay Ninh and Dong Nai, and 27 existing IZs will be expanded by 2015, Son said.
Vietnam currently houses more than 150 IZs and EPZs which cover a total of 320,000 ha in 55 provinces and cities nationwide, of which 21,700 ha were occupied.
Phu Yen develops with foreign investment influx
The southcentral province of Phu Yen has attracted major foreign investment projects after years of lagging behind other parts of the country.
In 2007, the province attracted a record US$2.3 billion in FDI, accounting for 7.9 per cent of the country’s total foreign direct investment and ranking fifth among the country’s investment destinations.
Chairman of Phu Yen Province People’s Committee Pham Ngoc Chi attributed the rapid growth to investments in petrochemical projects, particularly the Vung Ro oil refinery plant. Technostar Mangement Ltd (UK) and Russia’s oil company Telloil invested $1.7 billion into the refinery, which is expected to have a capacity of 4 million tonnes a year.
The 380-ha project in Ong Hoa District will be operational in 2011 and reach a turnover of $2.23 billion a year.
Other major projects involve building infrastructure for a 2,600 ha petrochemical industrial park in Dong Hoa District and a deep seaport in Bai Goc to accommodate ships of 250,000 DWT.
These projects will be completed in 2024, with an investment capital of $11 billion including $5 billion from Naptha Cracking oil complex. They will provide jobs for 15,000-20,000 people and have a combined turnover of US$20 billion a year.
Chi said the investment success stemmed from the province’s promotion efforts. In 2007, an investment conference organised by provincial officials in Singapore led to an agreement to invest in the petrochemical industrial park and the oil complex.
Investors from the US, Canada, Japan, Australia, South Korea and Middle East have also flocked to Phu Yen to explore investment opportunities.
Taking advantage of its favourable geological conditions with highway, railway and seaport networks linking the central and the Central Highlands provinces, Phu Yen officials are cooperating with other central provinces to develop major transport infrastructure projects.
These projects involve the railway linking Tuy Hoa (the town of Phu Yen) with the Central Highlands, an underground tunnel through Ca Pass, and the upgrading of highways between the province and the Central Highlands.
Chi said the province will further invest in building Phu Yen into a gateway for the area bordering Viet Nam, Laos and Cambodia via road, railway, waterway and air networks.
The Prime Minister recently approved a plan to establish an economic zone in southern Phu Yen. The 20,370-ha zone will house industrial parks and link up with Vung Ro seaport, Tuy Hoa airport and Van Phong economic zone in Khanh Hoa Province.