The Attractiveness of NEZ 

In H1/2023, the North attracted the greatest manufacturing FDI at USD$3.4 billion, equal to a 63% share of newly registered manufacturing FDI with 238 new projects. Bac Giang had a 20% share or USD$1.06 billion with notable investments from Fulian Precision Technology (Singapore) at USD$621 million and LONGi Green Energy Technology at USD$140 million. Bac Ninh had the third highest manufacturing FDI nationwide with 9% shared value at USD$486 million. 

For investment industries, in H1/2023, electrical equipment had the greatest newly registered manufacturing FDI with a 21% share valued at USD$1.14 billion. Computers, electromagnetic, and electrical products had a 20% share of the investment capital, followed by rubber and plastics with a 15% share. 

In the NEZ, computers, electronics, and electrical products attracted the most newly registered FDI with a 19% share of the region's total investment capital; electrical equipment followed with a 15% share; rubber and plastic products received a 5% share; motor vehicles had a 4% share. In the Southern Economic Zone (SEZ), rubber and plastic products had the greatest manufacturing investment with a 10% share; metal components had a 4% share, and berverage had a 3% share. 

Solar-related manufacturers are moving North, comprising three of the top five manufacturing projects in the NEZ in 2022. The NEZ is home to 77% of the 30 manufacturers of solar energy products, while the SEZ has a 23% share. 

Trina Solar has the most substantial investment with a USD$275 million 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 H1/2023 at a modern facility in Que Vo Industrial Park, Bac Ninh Province with an annual capacity of 1 gigawatt. In 2023, AD Green, a private Vietnamese enterprise, commenced operations at a USD$45 million facility with a 3-gigawatt solar panel production space, catering to domestic and international clients. The 8-ha facility is in An Ninh Industrial Cluster, Tien Hai District, Thai Binh Province. 

The NEZ is home to tenants in high-value-added sectors, such as automotive, machinery and equipment, and  electronics and computers. 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.

Thomas Rooney, Senior Manager, Industrial Consulting Services, Savills Ha Noi, explained: "The NEZ has a strategic location with access to local and international markets. It also has improving infrastructure with highways and three major ports, including Hai Phong Port, Lach Huyen Deep Water Port, and Cai Lan Port. Large-scale projects involving machinery or solar products require large land banks. Areas, which puts the NEZ at an advantage because it has more available land banks and more affordable land prices.”  

High Land Prices 

According to Savills Viet Nam Spotlight: Industrial Real Estate Market Report 2023, in H1/2023, the NEZ had 68 industrial parks spanning 12,000 ha with occupancy averaging 83%. Land prices reached USD$138 /sq m/one-off term, up from USD$102 /sq m/one-off term in the same period in 2022. 

Bac Ninh had the greatest land price increase, rising by 48% year-on-year (YoY) to USD$156/sq m/one-off term given the rekindled interest of electronics companies and suppliers looking to diversify supply chains beyond China. 

Hung Yen had a 45% YoY increase to USD$132/sq m/one-off term. Hai Duong rose by 33% YoY to USD$101/sq m/one-off term and Hai Phong increased by 28% YoY to USD$129/sq m/ one-off term.

Savills report shows stock of ready-built factories and ready-built warehouses in the NEZ  reached 3.5 million sq m (NLA), with about 618,000 sq m of vacant NLA.  Rent averaged USD$4.8/sq m/month (excluding VAT) in H1/2023 with occupancy of 83%, decreasing YoY with new supply in Hai Phong and Bac Ninh. 

John Campbell, Associate Director, Head of Industrial Services, Savills Viet Nam at Savills Viet Nam, stated, "While occupancy growth YoY in the NEZ is modest, land prices rent increased substantially. This could be a concern as land price remains a key advantage for the NEZ over the SEZ. Land price will be a vital factor for site selection for the influx of electronics and automotive players and the new wave of solar manufacturing projects looking for large land banks."