News Jan 26 25

Top 6 Common Pitfalls to Avoid When Renting a Factory for Lease in Vietnam

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The choice for where to rent a factory for lease in Vietnam is a sound decision for the extension or upgrading of their activities by manufacturers. Yet, the leasing process has multiple setbacks that, if not solved, will result in losses of resources and lost opportunities.

From location selection to the local regulation knowledge, each stage should be related to each other. This walkthrough identifies the most frequent issues tenants encounter and offers practical tips to avoid them, such that the leasing process is smooth and inexpensive.

No.1: Location-Related Pitfalls

1. Impact of Poor Location Choices

The choice of the right location of the factory for lease in Vietnam is one of the leading decisions of a manufacturing business. A poorly chosen site is most likely to have a significant effect on logistics, the workability of the population and time to production.

With factories located in geographically remote areas, away from major ports or suppliers, higher transportation costs and delayed deliveries are inevitable. In addition, lack of access to a specialised workforce can compromise the operation efficiency and production quality. Plus, if the supporting infrastructure itself (e.g., road, electricity, water) is not reliable, operations can be subject to frequent interruptions, which consequently can affect revenue.

2. Common Mistakes On Poor Location Choices

Maximize ROI with Industrial for Rent in Vietnam: A Guide for Startups
Source: Freepik

There is a common error among tenants to focus on cost savings rather than strategic positioning. For example, leasing factories in cheaper, distant locations without considering the logistics network is counterproductive. One of the common errors is not taking the local zoning regulation into account, which will restrict the acceptable type of manufacturing processing.

3. Solutions to Avoid Location Issues

To overcome such unexpected pitfalls, tenants need to first consider the remoteness between the factory and suppliers, distributors, and ports. To obtain a decent understanding of where to best locate themselves (i.e., taking business needs into account), a leasing expert with experience in the industrial zones of Vietnam can be consulted.

No.2: Legal and Compliance Challenges When Renting a Factory for Lease in Vietnam

1. Navigating Vietnam’s Leasing Regulations

Rental of a factory for lease in Vietnam is a relatively complicated matter that depends on the ability to understand how the Vietnamese legal system actually operates. Industrial property laws in Vietnam can be complex, even harder for the new investor who is unfamiliar with the Vietnamese legal system. Tenants should take into account matters such as land use, environmental standards, and permits necessary for certain types of manufacturing.

Errors in realising or adhering to these rules may result in sanctions, operational delays, or even termination of the lease. Local constraints (e.g., restrictions on foreign property ownership of leased facilities) may also limit the tenant’s actions upon the factory for rent in Vietnam; thereby, compliance is an issue of paramount concern to be addressed.

What Could Vietnam Do to Get Ready for the Global Minimum Tax Policy?
Source: Helsinkitimes

2. Risks of Ignoring Compliance

Ignoring compliance requirements can result in significant setbacks. Factories that are not licenced may be fined or completely shut down. A delay or failure to achieve environmental or safety targets may lead to an upset of the production process and devastate companies’ images. Misunderstanding of legal provisions due to a language barrier is one of the difficulties of foreign tenants.

3. Strategies for Legal Compliance

In order not to fall into these pitfalls, tenants are advised to seek legal advice from attorneys who have experience in Vietnam industrial leases. Such practitioners may validate the contracts, verify the legal status of the property, and verify that the facility is up to the operational requirements. Additionally, to confirm zoning compliance and any associated certifications can avoid risk and an easier onboarding process.

No.3: Financial Oversights of Renting a Factory for Lease in Vietnam

1. Hidden Costs to Watch For When Leasing a Factory for Lease in Vietnam

While the monthly rental of the factory for rent in Vietnam looks attractive, the hidden fees will quickly make the total cost skyrocket. Examples of common hidden costs are property taxes, maintenance fees, utility charges, and compliance costs in order to meet safety or environmental regulatory requirements. Furthermore, it may be necessary in order to respond to the requirements of currently producing practices to retrofit existing factories, which will increase the cost.

Failure to account for these hidden costs can lead to budget overruns, making the lease far more expensive than initially anticipated. As an instance, a tenant could lease a facility with no second thought only to find out later that substantial capital improvements are warranted to enhance infrastructure or install equipment, which may not even play a real usage role.

2. How to Minimize Financial Risks

Maximize ROI with Industrial for Rent in Vietnam: A Guide for Startups
Source: Freepik

In order not to be caught by surprise, tenants are advised to request a comprehensive breakdown of the cost for the landlord, containing all potential cost sources in addition to the basic rent. This should include maintenance responsibilities, utility rates, and taxes. Negotiating clear terms for shared costs can also reduce financial uncertainty. No less important is the carrying of an unscheduled outlay contingency budget, especially when one is operating on older facilities under lease.

No.4: Inadequate Inspection of the Factory for Lease in Vietnam

1. Risks of Skipping Inspections

Savings in time and money by not or giving very little attention to a factory for lease in Vietnam is one wrong step mistake. All of the above, structural defects, obsolete equipment in the factory, or poor facilities can negatively affect the production process. It is possible that a factory, which appears promising on paper, can be missing the fundamental elements such as adequate ventilation, a fire protection system, or a constant power supply.

2. Overlooked Property Concerns

In the context of importance to temperature-sensitive items, tenants often overlook important details such as floor load capacity, drainage, and insulation quality. If the problems are not addressed early enough, it can lead to delays in production and/or the cost of expensive retrofits. Also, units lacking valid safety certifications can put tenants at risk of compliance violations.

3. Tips for Proper Inspection

On-site examination, learned from industry experts, plays a vital role. Tenants should confirm the adequacy of the nature of the factory for lease in Vietnam to their operational requirements and verify that it meets health, safety, and environmental standards. Having utility connections verified, equipment tested, and maintaining records can provide further reassurance.

How to Find a Good Industrial Warehouse for Lease in Vietnam?
Source: Unsplash

No.5: Unfavorable Lease Terms

1. Common Problems in Lease Agreements

Lease agreements for factories in Vietnam, which include clauses that tenants often miss. Common issues are not flexible restrictions that limit tenants to long tenancies, high penalties for terminating early, and a vague definition of maintenance-related duties. Language differences can also lead to miscommunication, which can then create conflict with landlords.

2. Tips for Negotiating Better Terms

Tenants are urged to employ bilingual attorneys to assess lease agreements and interpret any unclear provisions. In particular, it is recommended that it be negotiated that, for instance, predefines lease duration or grants lease renewal options. In addition, it is easily possible to clearly assign responsibilities for maintenance and repair that can avoid future disputes. Always request translations of contracts to avoid misinterpretations.

No.6: Ignoring Future Trends and Growth Potential When Choosing a Factory for Lease in Vietnam

1. Choosing Factories That Limit Expansion

Most tenants consider only immediate considerations when using a factory for lease in Vietnam. But for factories that are not scalable or equipped with contemporary facilities, this could hamper growth in the future. A facility with no room for growth or with outmoded equipment can spiral out of date far too soon as production volumes increase.

2. Steps to Future-Proof Your Lease

Tenants should evaluate properties based on long-term business goals. Warehouses with continuously adjacent land for expansion, modular layouts, or improved infrastructure are more likely to grow. Facilities specifically built for automation or eco-friendly operation can also contribute to tenants’ ability to compete in a changing context of manufacturing.

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Factory leasing in Vietnam has good potential, but there are so many hurdles that tenants face if the business is to succeed. Selecting an appropriate site up to the legal issues involved in every step, there is a need for careful planning and attention. Avoiding the typical blunders, like hidden charges, inadequate surveys, and inflexible lease conditions, tenants can obtain a factory for rent in Vietnam that fits their manufacturing purposes while reducing the associated risks. The seamless leasing process based on discussion with industry experts and thorough due diligence evaluation is of major importance.

A factory for lease in Vietnam
Source: CORE5 Vietnam

If you’re new to Vietnam and looking for a factory for lease in Vietnam, CORE5 Vietnam provides excellent options tailored to your needs. Their factories are strategically located, offering prime access, spacious layouts, and modern facilities designed to enhance your operations. Dedicated support ensures a smooth leasing process and long-term satisfaction.

Stay updated on their latest developments to secure the perfect space for your business. Schedule a tour of their factory village to explore options that align with your requirements. With a commitment to delivering high-quality industrial spaces and exceptional customer service, CORE5 Vietnam helps you find the ideal location to grow your operations and thrive in Vietnam’s dynamic industrial market.

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