Bright Prospects for Ready-Built Factory Leasing

Positive Growth Indicators in Ready-Built Factory Supply

According to the "Vietnam Industrial Real Estate Spotlight 2024" report recently published by Savills, by the end of 2024, the total supply of ready-built warehouses reached 15.1 million square meters, marking a 31% increase compared to the same period last year. This is considered a positive signal for the robust development of this segment, reflecting the growing demand from investors and businesses as the economy recovers. Notably, new supply has been recording strong growth in key provinces, opening up exceptional development opportunities for both investors and manufacturing enterprises.

Specifically, in the southern region, the supply of ready-built warehouse rentals reached 10.6 million square meters, with an almost balanced distribution between ready-built factories (49%) and ready-built warehouses (51%). Meanwhile, in the northern region, the supply reached 4.5 million square meters, accounting for about 30% of the national total, with 61% being ready-built factories and 39% ready-built warehouses.

High Demand for Factory Rentals from Enterprises

CBRE reports that new supply is abundant, especially in key areas. Concurrently, absorption rates in both the northern and southern regions have reached their highest levels in the past three years. This indicates substantial demand from manufacturing, logistics, and industrial enterprises, reflecting the recovery and expansion of the economy.

Specifically, the occupancy rate for ready-built factories in the northern region has reached 88%, an increase of nearly 2% compared to the same period in 2023. In the southern region, the occupancy rate has also increased by nearly 8%, reaching 89%, surpassing the average of previous years.

Regarding ready-built warehouses, the market shows a clear differentiation between the two regions. In the north, ready-built warehouse projects maintain a stable net absorption of approximately 0.2 million square meters, similar to the levels recorded over the past two years. In the south, net absorption has reached 0.4 million square meters.

In the southern region, demand is primarily driven by manufacturers in key sectors such as furniture, household goods, electronics, and e-commerce. Notably, among rental inquiries, clients from China account for up to 25%, a significant increase from just 10% in 2023.

In the northern region, demand mainly comes from logistics, electronics, and materials manufacturing sectors, with primary clients being Chinese and Vietnamese enterprises. Notably, there is a resurgence of European and American clients seeking industrial land and warehouse space.

Opportunities Accompanied by Challenges

The positive recovery of the economy has propelled multiple sectors, including the ready-built warehouse rental segment, which has seen considerable improvements in both pricing and absorption rates over the past year. Foreign direct investment (FDI) inflows into Vietnam continue to rise, with strong investment commitments from international "giants," contributing to stable and favorable occupancy rates in this segment across both regions.

Looking ahead to the prospects of the ready-built warehouse market in 2025, Mr. Thomas Rooney from Savills suggests that demand for ready-built warehouse rentals will continue to grow robustly, especially as Vietnam's e-commerce market expands rapidly. The e-commerce sector requires substantial warehouse space to store large volumes of goods, thereby creating significant opportunities for the ready-built warehouse rental market.

However, this growth also presents challenges. The increasing supply means that investors and developers need to focus on enhancing the quality of their facilities, integrating modern technologies, and providing flexible rental solutions to meet the diverse needs of clients. Additionally, sustainable development and environmental considerations are becoming increasingly important, requiring businesses to adopt green practices and obtain relevant certifications to attract eco-conscious tenants.

In conclusion, the ready-built factory rental market in Vietnam holds promising prospects, driven by economic recovery, increased FDI, and the booming e-commerce sector. To capitalize on these opportunities, stakeholders must navigate the accompanying challenges through innovation, quality enhancement, and a commitment to sustainability.

Rising Market Demand for Ready-Built Factories and Warehouses

According to Mr. Vu Minh Chi from Avison Young Vietnam, the booming e-commerce sector and the influx of FDI into the processing and manufacturing industries are driving a significant surge in demand for ready-built factories and warehouses.

He also highlighted that Donald Trump’s potential re-election as U.S. President could accelerate the shift in global manufacturing toward alternative markets, with Vietnam emerging as a key strategic destination due to its competitive advantages. This shift is expected to further diversify and expand the ready-built warehouse and factory market to meet the rising demand from global enterprises.

Intensified Competition Amid Rapid Market Growth

While the market is experiencing strong momentum, competition within the ready-built warehouse and factory segment is becoming increasingly fierce. As demand continues to rise, developers and landlords must adapt and innovate to maintain their market positioning.

To navigate market fluctuations effectively, warehouse and factory owners should implement flexible strategies to maximize the value of their built assets.

"This approach not only meets the diverse needs of tenants but also helps developers sustain long-term growth in an increasingly competitive landscape," said an Avison Young expert.

HLI ECOHUB NAM HA READY-BUILT FACTORY  

• Location: Dong Ha Commune, Duc Linh District, Binh Thuan Province
• Hotline: 0964 582 346
• Email: contact@hoalonginvest.com
• Address: 19 Tran Quy Kien, Binh Trung Tay Ward, Thu Duc City, HCMC