Foreign investment boosts growth in Vietnam’s industrial real estate sector

The country is faced with excellent rental prices, occupancy rates, and high demand for ready-built warehouses, factories, and logistics facilities

Foreign investment in industrial and logistics properties in Vietnam is expected to increase, driving the sector’s growth. Vietnam Plus reported that the largest-ever US business mission to Vietnam visited the country to seek investment opportunities, with most of the firms already having business and production activities in Vietnam. 

Major global groups are also planning to expand production in Vietnam. The rent of industrial real estate and occupancy rates are excellent across all regions of Vietnam, and the demand for industrial land is expected to remain high, particularly for ready-built warehouses, factories, and logistics facilities. There is also great potential for developing projects related to data centres, cold storages, and logistics.

According to Vietnam Investment Review, in the first two months of 2023, three industrial areas in Bac Giang province received more than VND21.1 trillion (USD900 million) in investment. China’s Yadea Group will invest VND2.3 trillion to manufacture electric motorcycles, while Singaporean Ingrasys will open a factory for electronic components and high-tech communications equipment. 

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Additionally, Chinese company Hainan Longi Green Energy Technology will fund a solar panel manufacturing plant. Industrial real estate is attractive to investors due to its maintained upward trend in rental prices, with American companies looking to expand production centres and global supply chains in Vietnam. Despite the economic recession, experts predict continued demand from investors.

With all this, Vietnam’s industrial real estate sector is expected to experience growth in 2023, with demand driving up rental prices of industrial park lands in tier one markets by five to ten percent. Vietnam News noted the increase in demand is attributed to the ongoing production shift and China-plus One strategy of manufacturers. In 2022, net absorption in tier two markets witnessed a substantial increase, further confirming the continuation of this trend in the coming years. 

The northern industrial markets experienced positive performance, with strong demand from sectors including electronics, solar-energy, automobile manufacturers and ready-built warehouse and ready-built factory developers. The average rent of tier-1 markets in the South increased by eight to 13 percent year on year and reached VND3.9 million per square metre by the end of 2022.

The Property Report editors wrote this article. For more information, email: [email protected].