High-class office furniture is facing a new danger due to soaring land rents. Capital is a high-value product line favored by FDI enterprises. Vietnamese enterprises only need these products without really favoring them. The land rents in industrial parks have continuously increased sharply in recent times. The advantage in attracting Vietnam’s FDI is reduced. This has reduced FDI enterprises entering Vietnam. And at the same time, the demand for high-class office furniture decreased accordingly, the risk was newly born.
High-class office furniture is mainly serving FDI enterprises
The high-value interior line in terms of both functionality and price is serving mainly FDI. In our country, this product line has been imported for a long time. However, domestic enterprises are not very salty with them. There are many reasons for a perfect product to be ignored in the past. In recent years, there have also been many Vietnamese enterprises that recognize their benefits but are limited. Therefore, this high-class product line still mainly serves corporations and FDI.
Not only bringing perfect function for daily work. Bringing practical benefits of health to personnel, aesthetics for the working space. This product line also creates strengths in competing personnel for businesses. It is also part of the reason why Vietnamese businesses have always lost all the time.
According to statistics from the business situation of proce high office furniture itself. In the past five years, 90% of their customers are FDI enterprises and multinational corporations. Only a very small part of large enterprises in Vietnam can be their customers. This gives us a clearer view of how the number of FDI will affect this industry.
High-class office furniture affected by rising land rents in industrial parks
Colliers Vietnam market report recorded the average asking rent for industrial land in Ho Chi Minh City in the first three months of 2021 at about USD 165/sqm/lease term, while this figure in Hanoi was USD 140/sqm/lease term. Notably, the number of industrial parks in Ho Chi Minh City and Hanoi has almost remained the same, causing the rents of industrial real estate to constantly increase. This will particularly affect industries with relatively low profit margins, such as textiles and furniture.
Not only Ho Chi Minh City, in the South, land rents in industrial parks in 2020 reached 147 USD / m2, industrial park land in Binh Duong (increased 4.9%) reaching more than 107 USD/m2; Dong Nai (up 6.5%) at US$98/sqm; Long An has a rent of USD 123 per sqm (up 7.8%) and Ba Ria Vung – Tau is 65 USD/m2 (up 18.1%).
The increase in land rents in industrial parks causes many FDI to rethink coming to our country. As said above, the high-class product line for this working space is mainly still serving FDI. The reduction of FDi sources causes the demand of high-end furniture to decrease. The industry is in need of more domestic demand to limit this risk.
Some methods to help address upcoming risks
In order to reduce the dangers of rising housing prices, it is still necessary to attract FDI. Colliers Vietnam’s representative said that the development of new industrial parks in neighboring provinces of Ho Chi Minh City and Hanoi will contribute to reducing the “heat” of rents. Currently, in the North, many investors have stepped up their search for industrial land in provinces such as Hung Yen, Hai Duong or Bac Ninh, where land rents are lower and land funds are more abundant.
Some provinces in the South also plan to expand industrial parks to attract foreign investment. For example, Long An province has been approved to add 3 new industrial zones to the national planning including Saigon – Mekong Industrial Park 200 ha, Tan Xi Industrial Park 654 ha and Loc Giang Industrial Park 466 ha. Dong Nai province consists of Long Thanh, Cam My, Nhat, Trang Bom, Nhon Trach and Long Khanh districts with plans to build more industrial zones, each from 200 hectares to 900 hectares to solve the shortage of area.
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