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To buy land and build a factory or to rent a ready-built factory: Which is better?

April 13, 2023 00:44 AM

When investing in Vietnam, foreign businesses need to carefully consider whether to buy land and build factories or to rent ready-built factories for lease.

The challenges of building a completely new factory

When it comes to building new factories, foreign businesses need to weigh up the pros and cons, including the costs and time of construction, not to mention legal procedures in the host country.

The increasing prices of raw materials result in huge investment costs

The increasing prices of raw materials are placing cost pressure on businesses that intend to build new factories. Take steel – the one that accounts for 20% of total raw materials – for example. According to the statistics of Vietnam Steel Association (VSA), there is about a 7% increase in the price of steel products compared to the figure at the end of 2022. Similarly, the prices of other raw materials such as bricks, sand, stones, etc. are also on the rise, which leads to a significant increase in overall costs.

Unlike renting ready-built factories, building a new one involves different tasks that require collaboration with multiple contractors. It can take a few months to several years to complete the construction of a factory not to mention the additional costs that businesses have to spend when they need to speed up the construction process.

Building factories during rainy season: A stack of disadvantages

Another factor that also hinders the project construction is the weather. If construction takes place during the humid season in the northern region of Vietnam (from February to April) or during the rainy season that lasts for 6-7 months a year, the complete time will be prolonged. In addition, the raw materials will be prone to damage, which can negatively affect the quality of the entire project.

Land scarcity makes it difficult to find a good location for construction

When investing in Vietnam, many foreign companies seek to locate their factories in key industrial zones in order to take advantage of their strategic location for production and transportation. However, it is worth noting that the area of land available for industrial real estate is becoming scarce. Meanwhile, in some regions that own vast tracts of land, there are still many limitations in terms of infrastructure and transportation.

For existing industrial parks, the average occupancy rate nationwide is over 80%. In some particular provinces such as Hanoi, Bac Ninh, and Bac Giang, the occupancy rate almost reaches 100% (According to the Department of Housing and Real Estate Market Management). This poses difficulties for businesses in finding strategic locations to build factories. Even if there is an ideal location available, it is really expensive to acquire.

GNP Yen Binh 2: Optimal solution for ready-built factory for lease

Faced with various challenges when building a new factory, investors are shifting to ready-built factories for lease to save costs and pick a prime location. For example, GNP Yen Binh 2 – the ready-built factory for lease project in Thai Nguyen, owned by Gaw NP Industrial, is becoming the go-to choice for investors.

Located in Yen Binh – a key industrial park in the North, renting a ready-built factory for lease in GNP Yen Binh 2 allows businesses to easily transport goods to seaports and airports, as it only takes about an hour’s drive to reach Hanoi and Bac Ninh via the Hanoi-Thai Nguyen Expressway. In addition, the project is situated on four roads connecting Noi Bai International Airport, downtown Hanoi, the deep-water port of Hai Phong, and the Vietnam-China border gate.

In addition to the strategic location, the ready-built factories here also commit to providing modern international-standard infrastructure and facilities, including an advanced fire protection system, wide internal roads that facilitate the transportation of goods, and column-free design that optimizes usable space.

In addition, when choosing a ready-built factory at GNP Yen Binh 2, businesses can also take advantage of available shared facilities such as an integrated wastewater treatment system, a canteen, public restrooms, and large parking areas. Having everything pre-arranged and installed, businesses can quickly put the factory into operation much faster than building a new one from scratch.

To get further information or advice on renting a ready-built factory at GNP Yen Binh 2, please call our Hotline at +84 789 75 77 88.

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