Industrial Park - Development orientation for ready-built factories/warehouses
• We observe stable growth in demand for ready-built factories and warehouses (RBFs/RBWs), a sector that industrial park developers may increasingly focus on for long-term expansion. According to JLL, from 2019 to 2023, the supply of RBFs/RBWs recorded an average annual growth rate of 14.5%, with a total leasable area increasing by 6 million sqm. By 2027, the total leasable area is expected to reach 19 million sqm, with a projected average growth rate of 8% per year between 2023 and 2027.• For Vietnam’s industrial park developers, expanding into RBFs is also a strategy to capitalize on available industrial park land, though it remains on a small scale. We believe this development model will attract more attention from industrial park companies in the near future due to its key advantages: 1) Providing stable cash flow; 2) Suited to small and medium-sized customers; 3) Meeting the high demand for RBWs, particularly serving e-commerce activities in Tier-1 cities like Hanoi and Ho Chi Minh City.
• Among companies in our watchlist, we see several have aligned their investment strategies with this business segment to maximize the potential of their industrial park land. In 2024, LHG completed the construction and has begun leasing RBFs at lot 3A 26-19 (LH3 Industrial Park) and plans to build additional RBFs at lot 3A and high-rise RBF in 2025, raising the total leasable area to 136,800 sqm (+20% YoY). SIP is partnering with CBRE to develop a system of RBW and a logistics center at LMX03, which will enhance LMX03’s business performance in the coming years.
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