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PROPERTY

PHOTO: VIET TUAN
On solid ground

Given the positive indicators observed in 2023, the outlook for Vietnam’s
industrial real estate sector appears highly favorable moving forward.

| By BAO TRAM

hough fluctuations have delayed (RBW) nationwide,” he said. “This market under construction on a total of 35,700
some transactions, Vietnam’s indus- correction is reminiscent of the first-gen- ha. IPs nationwide have high occupancy
T trial real estate segment had a rel- eration cycle witnessed in the office sector rates, of over 80 per cent, with the key
atively smooth 2023 and posted sound about 15 years ago.” northern provinces seeing 83 per cent
growth, and this sustained momentum is Knight Frank Vietnam also noted that and key southern provinces 91 per cent.
expected to be maintained into 2024. the ready-built market for warehousing The northern economic zone has a total
According to the latest report from Knight and factories has attracted significant for- leasable area of 12,000 ha with 68 indus-
Frank, the country’s industrial market eign investment since 2018, with a five- trial parks, and tenants include enter-
remains robust, with key factors emerging fold increase in investor numbers. Mr. prises in electronics and computers,
in 2024 that demand attention from Crane acknowledged the challenges posed automotive, machinery and equipment,
investors and occupiers alike. Industrial by this development boom, particularly and solar-related manufacturing. Notable
park (IP) occupancy rates in the major in the greater Ho Chi Minh City area, occupiers include Samsung, LG Elec-
economic clusters of greater Hanoi and where RBW supply stands at around 2.1 tronics, Canon, Hyundai, Honda, and
Ho Chi Minh City stand at a healthy 78 million sq m, creating an occupier’s market VinFast. Meanwhile, the southern eco-
per cent and 92 per cent, respectively. with rental pressures averaging at $4.5 nomic zone has 122 industrial parks
This has contributed to significant land and $4.7 per sq m per month in the coun- with a total leasable area of 24,883 ha.
price growth of 14 per cent and 58 per try’s south and north, respectively. “While Tenants include those producing rubber
cent, respectively, compared to the 2022- this trend was anticipated, it doesn’t inher- and plastic products, food and beverages,
2023 period. ently pose a risk to the market; it simply building materials, and textiles and
keeps costs competitive for occupiers in apparel. Notable occupiers include Lego,
POSITIVE OUTCOMES the near term as the market matures and Suntory PepsiCo, Intel, Unilever, Coca-
Mr. Alex Crane, Managing Director of scales up to compete regionally, particularly Cola, and Kumho Tires.
Knight Frank Vietnam, highlighted the against Thailand, which saw its RBW Vietnam’s industrial real estate sector
divergent trends found across Vietnam’s supply post a 2021-2024 compound annual is projected to experience strong growth
industrial sector last year. Capital value growth rate (CAGR) of 6.6 per cent com- in 2024 and the foreseeable future in ten
rates of operating assets experienced down- pared to Vietnam’s 15 per cent,” he added. specific cities and provinces around the
wards pressure due to high financing 2023 marked great performance from country - Ho Chi Minh City, Hai Phong,
costs, shorter land use terms, and the industrial real estate in the country, Sav- Quang Ninh, Bac Giang, Thai Binh, Hanoi,
availability of comparatively cheaper loca- ills Vietnam confirmed, with its figures Bac Ninh, Nghe An, Binh Duong, and
tions in Asia. “Capitalization rates in Viet- showing that there were 397 established Dong Nai - according to the 2023 Foreign
nam have increased, generally falling IPs in Vietnam last year with a total Direct Investment report from the Foreign
within the range of 9-12 per cent, driven land area of 122,900 ha. Of these, 292 Investment Agency (FIA) at the Ministry
by a surplus of new, high-quality ready- are operational, on a total land area of of Planning and Investment (MPI). Along-
built factories (RBF) and warehousing over 87,100 ha. Another 106 IPs are side this, leading source countries of

40 | VIETNAM ECONOMIC TIMES | FEBRUARY 2024 en.vneconomy.vn