Bac Ninh: The Driving Force Behind Northern Vietnam’s Industrial Growth
By Lan Do
Sun, October 6, 2024 | 10:55 am GMT+7
Bac Ninh province, neighboring Hanoi, is emerging as a pivotal player in northern Vietnam’s industrial landscape, according to a recent study by Knight Frank. This analysis reveals key trends regarding the demand for factories, warehouses, and industrial parks in northern Vietnam.
Rising Demand for Factory Spaces
The study highlights that the average asking rent for ready-built factories across the northern region has surged to $5 per square meter per month in Q3 2024. This marks an increase of 0.6% from the previous quarter and a notable 3.4% increase year-on-year. Such figures underscore the growing demand for modern and high-quality factory spaces that can meet the needs of various industries.
Bac Ninh’s strategic location and its well-developed industrial infrastructure play crucial roles in this growth. The province has become a hotspot for leasing, with international developers such as Frasers involved in projects like Yen Phong Phase 1, further attracting businesses from a variety of sectors.
Expansion of New Facilities
In addition to Bac Ninh’s bustling market, the launch of the BWID ESR Nam Dinh Vu project in Hai Phong city has introduced over 70,000 square meters of new factory space. Despite this increase in supply, the overall market occupancy rate across the northern region remains impressively high at around 90%. This reflects a robust and rising demand for factory spaces throughout the area.
Warehousing Demand Strengthens
Bac Ninh is also establishing itself as a leading destination for ready-built warehouses (RBW). With its proximity to major transportation routes and significant inflows of investment, the province currently represents about 44% of the total warehousing inventory in northern Vietnam as of Q3 2024.
As a result, the average asking rent for these modern ready-built warehouses has climbed to $4.6 per square meter per month, a 3.2% increase compared to the same period last year. The occupancy rate in the northern market has remained stable at 85%, reflecting a 4.6% year-over-year increase. Recent transactions largely stemmed from new launches in Bac Ninh and Hai Phong, signaling sustained demand for premium warehouse space in primary locations.
Industrial Land Dynamics
While the factory and warehouse sectors are thriving, the industrial land supply is experiencing a slower growth rate due in part to lengthy permit processes and infrastructure development timelines. The average asking price for industrial land reached $130 per square meter per month in Q3 2024, reflecting a year-on-year increase of 3.1%. This sustained demand for land highlights the ongoing growth trajectory of the region.
Land lease activity has remained robust, with Bac Ninh and Hung Yen provinces leading the way in absorption rates. Approximately 60 hectares of net absorption were recorded during the quarter, up 33% from the previous quarter, although this reflects a 48% decrease compared to a year ago.
Significant Investment Activities
Bac Ninh has also made headlines recently by granting approvals or registration certificates for projects valued at approximately $5.58 billion. These approvals were announced during a conference focusing on the provincial master plan and investment promotion within the northern province.
Among the notable projects receiving these in-principle approvals is the Hong Hac-Xuan Lam ecological urban area in Thuan Thanh district, in which VietinBank Trade Union Investment JSC is investing nearly $1.07 billion. This investment marks an increase of over $998 million from previous registrations, although the remarkable surge in funding has not been clarified.
Bac Ninh’s strategic developments, coupled with the growing demand for industrial spaces, position the province as a cornerstone of northern Vietnam’s industrial growth, promising a dynamic future for the region.