Vietnam’s thriving industrial real estate market sees an influx in FDI

Online shopping, which increased by 53 percent between 2020 and 2021, is a major cause of industrial sprawl

Vietnam’s industrial property sector is likely to gain momentum in the coming months as demand and rental prices have increased in the logistics and warehousing segments, reported VietnamPlus.

The country continues to be a leading destination for those investing in industrial real estate. This can be attributed to its stable growth rate, export-oriented economy, growing FTAs, investment incentives, and strategic location.

Meanwhile, Samsung and Walmart, among others, have moved into ready-built factories after prime real estate was scooped up in an earlier supply-chain relocation wave.

Nikkei Asia reported that Vietnam’s FDI from 2016 to 2021 more than doubled in five provinces, including Bac Giang, a manufacturing hub for Samsung, and Ha Nam, home to Apple supplier Seoul Semiconductor.

Manufacturing and exports have been driving demand in industrial zones in Vietnam. 

More: Vietnam’s industrial property market, expected to see more activity as demand remains high

There are also domestic factors to consider. Online shopping, which increased by 53 percent between 2020 and 2021, is a major cause of industrial sprawl, with the COVID-driven exodus from cities having forced factories to relocate to the countryside.

Moreover, warehouses are opening up all around Vietnam to store and process items ordered on Shopee and Lazada, with supply growing by about 25 percent annually between 2018 and 2020.

In the provinces surrounding Hanoi and Ho Chi Minh City, the supply of ready-built factories went up 53.8 percent this year compared with 2018.

Wareflex, which acts as an Airbnb for warehouses, says many companies are renting storage space rather than building their own.

More than USD14 billion of foreign direct investment entered Vietnam in H1 2022, with USD6.7 billion dollars flowing into the Northern region, compared to USD6.5 billion dollars in the Southern region.

Approximately 63,500 hectares of land are planned for 238 industrial zones and clusters in the Northern region that are either operational or are in the process of site clearance and construction.

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