The Northern economic zone (NEZ) receives a steady influx of FDI given its advantageous location and capacity to attract investments. Vietnam's industrial real estate is moving up the value chain with investment projects from high-value sectors.
In this zone, computers, electronics, and electrical products attracted the most newly registered FDI with about 20 per cent share of the region's total investment capital; electrical equipment followed with a 15 per cent share.
Leading corporations include Samsung, LG Electronics, Foxconn, Canon, Hyundai, Honda, and Vinfast. Primary tenants in the SEZ are diverse in sectors like rubber and plastic, food and beverage, construction materials, and garment industries.
Solar-related manufacturers are moving north, comprising three of the top five manufacturing projects in the NEZ in 2022.
The NEZ is home to nearly 80 per cent of the 30 manufacturers of solar energy products, while the rest is in the Southern economic zone.
Trina Solar has the most substantial investment with a $275 million USD project in Yen Binh Industrial Park, Thai Nguyen Province.
Investors are largely from Hong Kong, China, and Singapore, however, American solar module manufacturer Thornava Solar commenced manufacturing in the first haft of this year at a modern facility in Que Vo Industrial Park, Bac Ninh province.
This year, AD Green, a private Vietnamese enterprise, commenced operations at a $45 million facility with a 3GW solar panel production space, catering to domestic and international clients. The facility is in An Ninh Industrial Cluster, Tien Hai district, Thai Binh province.
Thomas Rooney, senior manager of industrial consulting services, Savills Hanoi, explained: "The NEZ is a strategic location with good access for local and international markets. Infrastructure has also drastically improved over the last five years with quality constructed highways to three major ports, including Hai Phong Port, Lach Huyen Deep Water Port, and Cai Lan Port.”
There have been a number of large-scale projects from automotive to electronics and solar products that have required large land banks for their high value-added production.
The NEZ is seen as a major advantage for investors, not only looking to capitalize on one of Vietnams key import and export routes via Hai Phong, but also the access via land through to other markets, he added.
High land prices
The NEZ had 68 industrial parks with occupancy averaging 83 per cent. Land prices reached $138 per square metre/one-off term, up from $102/square metre in the same period in 2022, according to Savills Vietnam’s report about industrial real estate market in the first half of this year.
Bac Ninh had the greatest land price increase, rising by nearly 50 per cent year-on-year, given the rekindled interest of electronics companies and suppliers looking to diversify supply chains beyond China.
Hung Yen had a 45 per cent year on year increase, while Hai Duong rose by 33 per cent and Hai Phong increased by nearly 30 per cent.