(TBTCO) – An expert believes that with the rapid expansion of industrial zones and key infrastructure projects, the industrial real estate sector plays an important role in attracting foreign direct investment (FDI) and promoting domestic production. It is expected that industrial zone real estate will continue to grow strongly in 2025 and beyond.
Increased supply gives tenants more choices
According to Knight Frank Vietnam, the supply of factories and warehouses will continue to increase in the southern region by the third quarter of 2024. Among them, ready-made factories increased by 2% (about 92,000 square meters) from the previous quarter, and ready-made warehouses increased by 3% (about 174,400 square meters) from the previous quarter. The improvement in supply and the slight increase in asking rents show that companies are increasingly confident in the long-term prospects of the market. The industrial park real estate sector also showed signs of growth, with net absorption reaching 83 hectares in the third quarter of 2024, an increase of 14.7% from the second quarter.
Long An, Ba Ria-Vung Tau and Binh Duong provinces are becoming investment highlights, attracting many businesses and diversifying industries. The development of new industrial estates such as the Nam Tan Thap Industrial Zone in Long An is expected to increase the attractiveness of the southern region to investors.
In the northern industrial zone, the average rent for ready-made factories reached US$5/sqm/month in the last three quarters, up 0.6% from the previous quarter and 3.4% from the same period last year. Bac Ninh province, located near the capital of Hanoi, is promoting industrial growth in the region. With its strategic location and developed industrial infrastructure, Bac Ninh has become a hot spot for leasing transactions, with projects from international developers such as Frasers Yen Phong Phase 1 and KTG Yen Phong Autumn attracting tenants from many industries.
In addition, the launch of the BWID ESR Nam Dinh Vu project in Hai Phong has added more than 70,000 square meters of factory space. Despite the significant increase in supply, the occupancy rate in the northern market remains high at around 90%, indicating that there is a high demand for factory space in the region.
Similarly, the existing warehouse sector has also seen good growth; among them, Bac Ninh is becoming a preferred destination in this area, and as of the third quarter of this year, its supply accounts for about 44% of the total market supply. At present, the asking price of modern existing warehouses in the northern region is US$4.6/square meter/month, up 3.2% from the same period last year; in the third quarter of 2024, the occupancy rate of the northern market is stable at 85%, an increase of 4.6% from the same period last year.
In assessing the industrial property market, Mr Alex Crane, Managing Director of Knight Frank Vietnam, believes that the continued development and utilisation of ready-made factories is a positive signal that will help occupiers have more choices when considering Vietnam as a suitable destination for business expansion.
At the same time, competition among leasing factory owners will create a favorable environment for tenants and stimulate growth. Currently, there are many options for leasing industrial space, including projects with environmental certification. This will help Vietnam better integrate into the global supply chain.
Industrial zone real estate competition continues to heat up
The Ministry of Construction's comments in its third quarter report for 2024 also show that demand for industrial real estate in the market is increasing, and consumption will grow steadily on a quarterly basis, with more rapid growth expected in the last few months of 2025.
Among them, industrial real estate transactions are mainly concentrated in product groups with complete transportation infrastructure connections, safety and legality, and sustainable growth momentum. They are concentrated in northern provinces with industrial advantages and have welcomed large amounts of FDI capital inflows, such as Thai Nguyen Province, Bac Ninh Province, Hung Yen Province, Hai Phong… and focus on high-tech fields such as electronics, semiconductors, artificial intelligence and renewable energy.
Mr. Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association, commented that in recent years, the development of transportation infrastructure has promoted the development of the industrial real estate sector. In addition, against the backdrop of continued strong growth in FDI capital, especially in the industrial real estate sector, the competition for industrial zone real estate will continue to heat up in 2025.
Mr. Do Hong Quan, General Manager of Vietnam Investment Consultants (VNIC), said that the industrial real estate market showed positive signs in 2024. In 2025, industrial real estate will usher in a real outbreak, and the wave of production transfer will rise again. Between 2024 and 2027, Vietnam is expected to add 15,200 hectares of industrial land and 6 million square meters of warehouses to quickly meet the needs of investors.
Experts agree that the industrial real estate market is expected to continue to grow strongly and sustainably through to 2025, especially as Vietnam increasingly establishes itself as a key link in the global supply chain.
At the same time, the growing production and logistics needs in the context of globalization will also drive the industrial real estate market to further develop. In particular, the transfer of production from other countries to Vietnam to optimize costs and time will definitely make a significant contribution to the prosperity of this market in the near future.
Industrial zone land rental prices are expected to continue to rise
According to a recent analysis report by SSI Securities, FDI capital inflows into Vietnam have maintained growth momentum over the past decade, thanks to the trend of production relocation. Countries such as Singapore, Taiwan and China are the main contributors to this growth. The reason is that Vietnam has competitive advantages in terms of favorable investment policies, low labor costs and a stable economy.
According to data from High Latitude Global, by the third quarter of 2024, the supply of industrial land in the northern key economic zone reached 16,700 hectares, up 1.7% quarter-on-quarter and 16% year-on-year. Thanks to the locational advantages, continuously improving infrastructure and positive market sentiment, the northern provinces maintained their growth momentum, with a total net absorption area of 158 hectares this quarter, up 32% year-on-year.
From now until 2027, the northern key economic zone will have about 4,700 hectares of industrial land available for rent. Among them, Haiphong and Hung Yen account for 27% and 23% of the total future supply respectively. As the demand for industrial land leasing remains strong, the rental price of industrial land is expected to continue to rise.
In the past three years, Vietnam has attracted many large investors, especially in the technology sector. Global companies such as Apple, Luxshare Precision, Pegatron, Vision, and Samsung have continued to invest and expand production. Due to the convenience of raw material supply chains, logistics, and consumer markets, investment projects are mainly concentrated in the northern region.
