Signs of declining foreign direct investment and dwindling manufacturing activity are slowing down the industrial property market.
In the first quarter the industrial property occupancy rate in the south declined by 8 percentage points year-on-year, according to real estate consultancy Cushman & Wakefield.
The rates declined by 11 and 9 percentage points for ready-built factories and warehouses, it added.
Another consultancy, JLL, said there are signs that the southern industrial property market is going into a short-term low demand period since exports are down.
The Vietnam Association of Realtors (VARS) said the market is suffering due to delays in clearing lands for many projects.
The lack of accommodation for workers at industrial zones is also a weak spot, it added.
With dwindling global economic prospects, foreign investors are keeping away.
In the first five months of 2023 foreign direct investment pledge in Vietnam was 7% lower at $10.86 billion.
VARS said it is vital that investors are aware of the government’s policies to be able to invest optimally.
Industrial land development plans, for example, should be publicized so that investors could study them, it said.
Administrative procedures should be simplified and red tape should be eliminated, it added.
Tran Minh Ha, chairman of property firm North Stars Asia, said the global economic uncertainty has an impact on the industrial property sector, with demand for Vietnamese goods remaining low.
Another issue is the high bank lending interest rates, he said.
“If loan interest rates are lowered, businesses will be able to access cheap money and push up manufacturing activity, which will help the industrial property market overcome short-term challenges.”