Industrial property in the Northern Key Economic Zone (NKEZ) saw strong development in the third quarter of this year, according to Jones Lang LaSalle firm (JLL Vietnam).

In the first nine months of this year, the occupancy rate recorded in all existing industrial parks (IPs) across the five most dynamic cities and provinces in the NKEZ, including Hanoi, Hai Phong, Bac Ninh, Hung Yen and Hai Duong, averaged 69 percent, an increase of 200 basis points compared to the previous data cycle in the first quarter of this year. The top rates were in Hanoi and Hung Yen.

The NKEZ stands out as having suitable features for enterprises to set up operations, Nguyen Hong Van, JLL Vietnam’s Director of Markets, said at a this week press conference in Hanoi.

Up to the third quarter of this year, the total leasable industrial land area stood at 9,371ha, of which the largest supply was in Hai Phong, followed by Bac Ninh, according to JLL Vietnam.

Bac Ninh and Hai Phong, the two leading industrial markets still have sufficient vacant land areas to capitalise on rising demand.

Further, new supply from subsequent phases of existing industrial parks and newly developed ones in strategic locations have also offered more options, making these two provinces the most desirable areas in north Vietnam, she said.

The average industrial land price in the third quarter hit 95 USD per sq.m per lease term, an increase of 6.7 percent year on year (y-o-y), Van said.

Aside from Hanoi as the economic centre with the highest price, Bac Ninh and Hai Phong still post leading prices thanks to their strong industrial foundation with well-known tenants, strategic location and established infrastructure.

Hai Duong and Hung Yen still kept their prices at reasonable levels. Average monthly rents for factory ranged from 4-5 USD per sq.m per month. This rent remained flat compared to the first quarter.

The strong development in the manufacturing sector across provinces has also brought with it the great potential for the establishment of other real estate sectors. This has been proven by strong investment pouring into the real estate market in the northern provinces as witnessed recently.

With an increasing proportion of FDI pouring into the north over the past decade, Hai Phong, Bac Ninh, Hung Yen and Quang Ninh are also fast becoming focal points for investment apart from Hanoi, according to JLL Vietnam.

The BCI Asia statistic shows that, after Hanoi, Hai Phong, Bac Ninh, Quang Ninh and Hung Yen are the top provinces in terms of the number of real estate developments. Apart from Quang Ninh, well-known for its Ha Long Bay and Van Don Special economic zone, the other three provinces have consistently led the north regarding industrial developments.

Bac Ninh and Hai Phong markets are strongly driven by residential projects being developed to capitalise on the growing housing demand from an increasing number of migrants and expats working in the provinces.

Unlike Bac Ninh and Hai Phong where most developments are concentrated in the city centre, most projects in Hung Yen cluster along its boundary with Hanoi, to benefit from the existing demand in this big city. Home to Ha Long Bay, Quang Ninh has been on the radar of many well-known developers, focusing on vacation and tourism-related properties.

About 615 ha is planned to be launched during the next 12-month period. Steady price growth for industrial land in the North of Vietnam is expected through this year end due to strong investor appetite. New investors, largely from Asian countries such as Japan, the Republic of Korea and China, will remain keen on Vietnam’s industrial property.