IZ land heats up, investors sell land for profits
The sharply increased demand for leased land in industrial zones (IZs) from foreign investors has prompted infrastructure developers to transfer IZ and port projects to earn profits.
Hoa Binh Corporation (HBC) has decided to transfer the project on developing the Nhi Thanh – Long An IZ project.
HBC contributed 97.87% of total capital, covering an area of 117.67 hectares and with investment capital of VND592 billion, in September 2008 through Hoa Binh Company Ltd (HBI).
It is expected that the IZ project located near the Ho Chi Minh City – Trung Luong Highway would bring the attractive profit of VND47 billion to HBC in 2016.
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At the company’s 2016 shareholders’ meeting, managers said the IZ market has been heating up in accordance with the free trade agreements (FTAs) Vietnam has signed.
As the rent and demand continues to rise, the enterprises will consider transferring the project if it can go for a good price.
HBI, the company which is managing the IZ, reported post tax profit of VND77.2 billion in the first six months of the year. As such, the profit HBI may bring to the holding company may be even higher than planned.
Other IZ developers are also planning the same thing. At the meeting with investors in April 2016, Truong Anh Tuan, president of Hoang Quan (HQC), said the company’s IZ projects, especially the IZs with ports, have been eyed by many investors.
The businessman affirmed that the business with IZs ‘will be surely good’ in 2016 and will still be prospering in the next five years.
In the past, Ham Kiem and Binh Minh IZs had few clients. Meanwhile, they had received guests who asked for land leasing and are willing to pay higher rent.
Cushman & Wakefield, in a report about Vietnam’s IZ market in the first quarter of the year, commented that the TPP and other FTAs, the stable economic situation, the state’s support policies and low labor costs all will attract foreign investors to Vietnam.
Foreign investors relocate their production bases to Vietnam to enjoy preferential tariffs. This will lead to higher demand for IZ land.
The Q2 report of Jones Lang LaSale (JLL) showed that the demand for leasing IZ land in the eastern part of the southern region is on the rise with an occupancy rate at 74%.
The IZ land in the area rents at US$63.3 per square meter on average for 50 years.
The rent is US$115.2 per square meter in Ho Chi Minh City and it may increase slightly in the future. Meanwhile, the rent is lower in neighboring provinces, at US$40-US$70 per square meter.
