Analysts foresee continued robust performance in the industrial real estate sector this year, driven by strong demand and increasing rental rates.
Despite economic challenges, the segment demonstrated substantial growth last year, boasting occupancy rates exceeding 80% in the northern region and 92% in the southern region, according to CBRE Vietnam.
The northern region witnessed a remarkable 37% surge in the total area of new industrial properties sold, reaching a five-year peak of over 800 hectares.
Conversely, the southern region experienced a 32% decline due to limited land supply, although the area remained significant at 500 hectares.
Beyond traditional sectors like electronics and automotive, emerging industries such as electric vehicles, semiconductors, and sustainable materials are eyeing Vietnam’s industrial real estate landscape, noted CBRE.
CBRE projects a 5-9% annual increase in industrial land rents in the north and 3-7% in the south over the next three years, with rents for ready-built warehouses and factories expected to rise by 1-4%.
Data from MBS reveals that industrial zone rents averaged US$123 per square meter in the north and $167 in the south at the end of last year.
SSI Research anticipates positive momentum in the industrial real estate segment in 2024, fueled by sustained growth in foreign direct investment (FDI) inflows into Vietnam.
In the north, demand for industrial land is poised to surge this year, driven by the relocation of production facilities from China, particularly in electronics and semiconductor sectors.
Over the next three years, the region is set to witness the development of several new industrial zones, including significant projects like Hung Yen Province’s Industrial Park No. 5 and Bac Ninh Province’s Gia Binh II Industrial Park, according to MBS.
In the southern region, an uptick in tenants from industries such as food and beverages, logistics, and manufacturing is expected, including garment, wood products, leather, and footwear manufacturers.
However, Vietnam faces stiff competition for FDI from countries like India and Indonesia, which are aggressively investing in infrastructure and offering attractive incentives, particularly in high-tech sectors like EV batteries and cloud computing. MBS also highlights the impact of the global minimum tax and power shortages during peak production seasons as potential deterrents to foreign investment in Vietnam.
