In 2023, despite various challenges in the market, the industrial real estate sector continuously shone brightly with the entry of many major international players. Experts predict that this segment will continue to lead in 2024.
In 2023 the real estate market faced difficulties, including an imbalance between supply and demand and a severe shortage of affordable housing. Additionally, legal bottlenecks, reduced investor confidence, and constraints in credit flow led to a record decline in market transactions.
However, amidst these challenges, industrial real estate was a consistent bright spot, welcoming many large international corporations. This was the only segment that saw price increases yet remained in demand due to its modern and intelligent development.According to the Vietnam Real Estate Brokers Association (VARS), industrial real estate topped the market throughout 2023. Vietnam became a new manufacturing hub for many foreign companies, especially in the high-tech sector.The country saw 7 new industrial parks commence operations and 13 under construction in 2023, with significant participation from large corporations from Hong Kong and Taiwan.
Vietnam had 412 established industrial parks covering a total area of 217,500 hectares. Of these, 293 were operational, covering about 92,200 hectares of natural land and 63,000 hectares of industrial land. The remaining 119 were under construction, with about 37,500 hectares of natural land and 24,700 hectares of industrial land.Despite economic difficulties, the occupancy rate and rental prices continued to grow. There was a slight decrease in occupancy rates in some provinces with new supply.
Remarkably, rental prices in this segment increased by about 20% compared to the previous period. In the South, the average rental price was 188 USD/m2/lease cycle, a 15% increase from 2022. Ho Chi Minh City and Binh Duong did not see price fluctuations due to long-term leases in existing industrial parks.
Industrial and economic zones attracted over 10,400 domestic investment projects and over 11,200 effective FDI projects, with total registered capital of over 2.54 million billion VND and 231 billion USD, respectively. FDI in industrial and economic zones accounted for about 35-40% of the country’s total additional registered FDI in recent years.
According to Mr. Nguyen Van Dinh, Chairman of VARS, this segment is expected to prosper in 2024. Vietnam’s dynamic market and positive foreign diplomacy are anticipated to enhance the industrial real estate market in 2024.Many new industrial investment projects have been approved, and future phases are set to commence. The supply of industrial real estate is growing in both the North and South, with significant demand for multi-story warehouses and ready-built factories.The demand is driven by investment plans and agreements from foreign businesses, choosing Vietnam as a destination in the supply chain shift. The approved provincial/city planning for 2021-2030 is expected to resolve some legal issues for industrial zones.
Mr. Nguyen Van Dinh predicts that the supply in 2024 will continue to grow, especially with modern, intelligent, and eco-friendly industrial parks. In the next 10 years, Vietnam plans to increase industrial land by 115,000 hectares, nearly 1.5 times the current number, with about 558 industrial parks nationwide.Furthermore, FDI in industrial and economic zones is expected to continue rising. In 2024, it is predicted to account for about 45% of the country’s total additional registered FDI.Ready-built factories and warehouses are expected to lead the industrial real estate segment. Investors from countries like Singapore, Hong Kong, China, South Korea, and the USA are potential customers for Vietnam’s industrial real estate.
Rental prices for high-quality industrial parks are expected to increase. Despite global political tensions, Vietnam remains a bright spot in the region.Ms. Pham Ngoc Thien Thanh, Deputy Director of Research and Consulting at CBRE Vietnam, also predicts that due to high occupancy rates and potential demand from foreign enterprises and conglomerates, rental prices will continue to grow. She believes this segment will maintain its attractiveness for investment in the future.