Industrial property will continue to thrive this year: analysts

Despite the economic downturn, the segment saw solid growth last year with occupancy rates of over 80% in the northern region and 92% in the south, according to property consultancy CBRE Vietnam.

The total area of new industrial property sold in the north jumped 37% to a five-year high of over 800 hectares.

But it fell by 32% in the south due to the limited supply of new land, though in area terms it remained high at 500 hectares.

In addition to the electronics and auto industries, high-tech ones such as electric vehicles, semiconductors and green materials are also eyeing Vietnam’s industrial real estate, CBRE noted.

It forecast industrial land rents to increase by 5-9% a year in the next three years in the north and 3-7% in the south, and rents for ready-built warehouses and factories to edge up by 1-4%.

Data from securities firm MBS shows that at the end of last year the average rent at industrial zones was US$123 per square meter over the lease cycle in the north and $167 in the south.

SSI Securities’ SSI Research expected positive developments in the segment in 2024 thanks to the sustained rise in FDI flows into Vietnam.

In the north, the demand for industrial land could increase significantly this year due to the shift in production from China to Vietnam, primarily by electronics and semiconductor companies.

In the next three years the region will have several new industrial zones, notably Hung Yen Province’s 193-hectare Industrial Park No. 5, Vinh Phuc Province’s 162-hectare SHI IP Tam Duong Industrial Park and 165-hectare Song Lo II Industrial Park, and Bac Ninh Province’s 250-hectare Gia Binh II Industrial Park, according to MBS.

In the south there may be more tenants from the food and beverages, logistics and manufacturing industries such as those making garments, wood products, leather, and footwear, it said.

Supply would also increase with the new 700-hectare Cay Truong Industrial Park and expansion of the Nam Tan Uyen Industrial Park, both in Binh Duong Province, it said.

It expected new industrial zones to focus on green and sustainable factors to attract more investors as high-tech projects that require clean materials and low carbon emissions become increasingly popular.

But the industrial real estate segment would also face new challenges this year, including fiercer competition from other Asian countries, it warned.

Vietnam’s two biggest competitors for FDI are India and Indonesia, both of which are investing heavily in infrastructure and offering lucrative incentives to attract foreign investors, especially in high-tech fields like EV batteries and cloud computing.

The global minimum tax taking effect this year and power shortages during peak production seasons are other factors that could negatively affect foreign investment in Vietnam, MBS added.