Industrial Real Estate Continues to Grow in 2024

Foreign direct investment (FDI) into Vietnam at the beginning of this year continues to surge with the expansion of international investors. The industrial real estate market in Vietnam not only welcomes “giants” multinational corporations but also accompanies many enterprises of various scales in the global smart manufacturing supply chain. Therefore, the demand for industrial land, factories, warehouses, and logistics is increasing, creating a heat in industrial properties in 2024.

Industrial property market continues to be a bright spot in 2024

According to the 2023 Foreign Investment Report by the Foreign Investment Agency, the top 6 FDI contributors driving strong development in Vietnam’s industrial real estate sector in 2024 are Singapore, Japan, Hong Kong, South Korea, China, and Taiwan. These 6 partners alone accounted for over 81.4% of the country’s total investment in 2023.

The Real Estate Brokerage Association (VARS) summarized that industrial real estate maintained its leading position throughout 2023 as Vietnam continued to emerge as a new hub for technology production and business, especially in the high-tech sector.

In 2023, the country saw the opening of 7 industrial zones (IZs) and the construction of 13 IZs. Many major investors from Hong Kong and Taiwan (China) participated in these developments.

According to VARS, industrial real estate rental prices increased by about 20% compared to the previous period, with the northern region experiencing the strongest price hike. The average rental price in this area is $135/m2/lease term, a 33% increase from 2022.

In the southern region, the average rental price is $188/m2/lease term, up 15% from 2022.

Similarly, a report by PropertyGuru also indicated that two products with good absorption rates in 2023 were warehouses and factories for rent, with occupancy rates exceeding 80%, and industrial land for rent with an absorption rate of over 90%.

Regarding the development of the industrial real estate segment in 2024, Mr. Nguyen Van Dinh, Chairman of VARS, predicted that the industrial land and factory rental market would continue to thrive this year.

“Vietnam will continue to be a preferred destination for many foreign investors. Investors from Singapore, China, South Korea, the United States, etc., will be potential customers for Vietnam’s industrial real estate. This will help maintain the upward trend in FDI in economic zones, industrial zones, and industrial clusters. It is expected that in 2024, FDI in industrial zones and economic zones will account for about 45% of the country’s total registered additional FDI,” Mr. Dinh said.

Enhancing Supply, Improving Infrastructure

Over the next 10 years, Vietnam is expected to plan an additional 115,000 hectares of land for industrial clusters, with approximately 558 industrial zones nationwide, nearly 1.5 times the current number. Many new industrial zone investment projects have been approved for investment initiation and are beginning to proceed with subsequent phases.

The supply of industrial property is experiencing growth in both the North and the South. The demand for industrial real estate remains substantial, especially for industrial land, multi-storey multi-functional warehouses, and ready-built factories.

Furthermore, the planning of many provinces and cities for the period 2021-2030 has been approved to address some of the legal procedure obstacles related to industrial zones and clusters. These factors will help industrial real estate in 2024 maintain its position and continue to grow.

Among these, Thai Nguyen is also a noteworthy market as it continuously increases its industrial land fund. According to the provincial planning of Thai Nguyen for the period 2021-2030, with a vision to 2050, the province will have 12 industrial zones covering a total area of ​​4,245 hectares, and 41 industrial clusters covering a total area of ​​2,067 hectares.

In February, Thai Nguyen province established 4 more industrial clusters with a total investment of over 2,700 billion VND in Phu Binh district, including Ha Chau 1, Ha Chau 2, Tan Duc, and Luong Phu – Tan Duc Industrial Clusters. At the same time, the province also established 2 more industrial clusters in Dai Tu district, namely Cat Ne – Ky Phu and Quan Chu, with a total investment capital of 1,400 billion VND.

Explaining the strong development trend of the industrial real estate market, Associate Professor Dr. Dinh Trong Thinh (Financial Academy) analyzed that Vietnam’s economy is growing, attracting attention from domestic and foreign investors; the country’s political and social situation is stable, and the investment environment and policies for foreign investment in Vietnam are increasingly appropriate. In addition, the FDI inflow remains positive, benefiting from favorable tax incentive policies. Transportation infrastructure is becoming increasingly synchronized and modern with commitments to invest in infrastructure ranking at the top of the region. Support services for industrial zones are also improving. These are the foundations for foreign investors to continue to seek opportunities in Vietnam in the coming years.

Source: Cong thuong, vtcnews, thainguyengov