Hanoi (VNS/VNA) - New policies promoting development of thedomestic automobile sector will create opportunities for the industrial realestate market, according to a CBRE Vietnam report released in December.

The report said recent rapid changes in Vietnam’s regulations, policiesand international trade agreements have had a significant positive impact onthe automobile market. These changes will help not only the industry but alsothe consumer market.

For the industrial real estate market, the most important factor is theincreased demand for production space, the report said.

The Vietnamese automobile industry still has much to do to compete withregional rivals. The State will introduce policies encouraging the domesticautomobile industry to develop its production and business, according to thereport.

Industrial land developers will have new opportunities to exploit theexpansion in manufacturing and business demand. Real estate developers canoffer the Government and automakers logistics solutions by clusteringproduction and supply activities into specialised automobile manufacturingcomplexes.

In 2017, the Government issued Decree 116 and Decree 125 to support theVietnamese car manufacturing industry by applying a legal framework to expandproduction scale and improve product quality.

There have been major industrial and commercial lease deals related to theautomobile sector over the past three years, with anticipated demand for leaseextensions in the near future.

High occupancy and rising rental rates are challenges for expandingproduction.

However, they present a chance for real estate developers to note theincreasing demand for space and the current limited supply, said the report.

According to the report, the automobile industry in Vietnam is stillunderdeveloped in manufacturing and assembly compared to other ASEAN countries,but the accumulation of industrial land for the industry is increasing.

At the same time, each region in Vietnam has distinct competitiveadvantages based on differences in business and production as well as landavailability.

The southern region accounts for about 43.16 percent of total automobilesales in Vietnam, but the production capabilities of the Southern area –including HCM city, Dong Nai, Binh Duong and Long An provinces – are muchsmaller than those of the other regions.

Assembly is mainly distributed in the north with a network of foreignoriginal equipment manufacturers (OEMs) as well as auto part manufacturingfacilities.

The establishment of VinFast factories has strengthened the automobileassembling and manufacturing platforms in the North. With a strong base andrich history of assembly and auto part production, the demand for largeindustrial land banks for manufacturing factories is worth considering in theNorthern region.

The central region, on the other hand, is the least developed area for theindustry. Da Nang city and Quang Nam province boast the relatively high densityof manufacturers, especially with the presence of Chu Lai-Truong Hai AutomobileComplex, developed by THACO. The complex is a fully integrated facilityincluding factories for assembling and manufacturing, warehouses and adedicated deep-sea port.

Over the past three years, many successful industrial land rentaltransactions have been recorded in the Southern region and most of them havebelonged to accessory factories looking to expand production.-VNS/VNA