The groundbreaking ceremony of VSIP II Quang Ngai Industrial Park in Quang Ngai province, Photo: Tang Thu

Numerous industrial parks (IPs) have received approval already this year in provinces such as Thai Nguyen, Bac Giang, and Binh Phuoc. Earlier this month, the groundbreaking ceremony for Song Cong II IP took place in the northern province of Thai Nguyen. The project spans almost 300 hectares, with a total investment of nearly $160 million.

A few weeks previously, Bac Ninh People’s Committee, also in the north, granted approval to Nghia Hung, My Thai, Song Mai-Nghia Trung, and Dong Phuc IPs.

In the central region, VSIP II Quang Ngai IP became the newest player in the field after the groundbreaking ceremony on March 12 with attendees coming from the government, and National Assemly Chairman Tran Thanh Man and Deputy Chairman Vu Hong Thanh. The initiative is located in Dung Quat Economic Zone with a total area of 498ha, and has a total investment of nearly $158 million.

Moving south, Bac Dong Phu IP, in Dong Xoai city of Binh Phuoc province, has been approved with a total investment of nearly $55 million and a land area of over 300 ha.

Speaking with VIR, Nguyen Thuong Lang, a senior lecturer at the National Economics University, highlighted that abundant foreign direct investment (FDI) inflows were a key driver behind the expansion of the industrial estate sector.

“The development of the industrial field, especially foreign investment in manufacturing, will be the main force driving the value of industrial real estate. According to the latest report from the Foreign Investment Agency, nearly 70 per cent of FDI inflows into Vietnam are directed towards manufacturing. Therefore, the upward trend in industrial real estate prices is both logical and inevitable,” Lang said.

According to the report released at the end of February, the manufacturing and processing sector led in attracting FDI, with slightly over $3.1 billion, marking a 50.6 per cent on year increase.

Lang also predicted strong growth in the industrial real estate market, suggesting that land rental prices will increase, particularly in prime locations.

Building on Lang’s prediction, Nguyen Hoai An, senior director at CBRE Hanoi Branch, said that over the next three years, industrial land rental fees are expected to increase by 4-8 per cent annually in the northern region and by 3-7 per cent annually in south.

“The primary drivers of this growth are the continuous development of new IPs, particularly in key markets such as Haiphong and Vinh Phuc in the north, as well as Binh Duong, Dong Nai, and Long An in the south,” An said.

An also pointed out that the expansion was not limited to traditional areas, as the development wave is spreading to central provinces like Thanh Hoa, Nghe An, Ha Tinh, and Quang Nam. In these emerging markets, professional developers are implementing new IP projects, helping to put these regions on Vietnam’s industrial map.

“For the ready-built warehouse and factory segment, rental prices are forecasted to rise slightly by 1-4 per cent per year during the same period. Although new supply remains high in both key industrial regions, demand for ready-built warehouses and factories is also showing signs of growth,” An added.

Discussing the outlook for the industrial real estate sector, Pham Thi Mien, deputy head of Market Research, Consulting and Investment Promotion, under the Vietnam Association of Real Estate Brokers, highlighted that the supply of new IPs was set to soar.

“Between 2024 and 2027, Vietnam is expected to add around 15,200ha of industrial land supply, along with more than six million sq.m of total warehouse and factory space. Alongside this supply expansion, demand is also growing positively, driven by the China+1 relocation trend and the implementation of trade commitments,” she said.

Under master plans for key markets for 2021-2030, provinces such as Binh Duong are expected to host 48-50 industrial areas, covering 25,000ha. Similarly, in Long An, the plan includes 51 IPs, covering almost 12,500ha.

In the north, Hai Duong province is approved for 32 IPs, covering approximately 5,600ha.

“I know quite a few people who have been developing small and medium-sized IPs in Hai Duong, Hung Yen, and Bac Giang. The moment they complete construction, partners from Hong Kong and China approach them with attractive rental offers,” said Tran Quang Trung, business development director at OneHousing.

“I see this as an excellent sign, when industrial real estate flourishes, it generates employment for local people. That, in turn, means higher incomes, enabling people to buy homes, invest, and improve their quality of life, ultimately fostering sustainable national development,” Trung added.

According to OneHousing’s representative, with the government’s target of raising per capita income by the end of 2025 and its roadmap towards 2030, industrial real estate is set to remain a highly lucrative segment, alongside commercial and residential real estate.

Meanwhile, Thomas Rooney, associate director of Industrial Services at Savills Hanoi, observed that Vietnam’s industrial real estate segment has been experiencing remarkable growth, with absorption rates for both industrial land and ready-built warehouses and factories rising significantly.

“Industrial land absorption rates in the north are now competing closely with those in the south, with a large proportion of available land already occupied. Notably, the ready-built warehouse and factory segment has seen strong uptake, with facilities being leased by manufacturers from Taiwan, China, Europe, and the United States,” he said.