The industrial real estate market continues to be the bright spot of Vietnam's real estate market in the first half of 2023. Industrial land, ready-built factories and warehouses all recorded positive absorption rates.
In the industrial land market, the absorption area in the Northern and Southern Tier 1 markets reached 386 ha and 397 ha in the first 6 months of 2023. This absorption is 20% higher for the South and 60% for the North compared to the first half of 2022.
CBRE Vietnam believes that industrial land rents continue to grow strongly due to strong demand. The average rental price for tier 1 markets in the North and South is 127 USD/m2/term and 187 USD/m2/term. Over the past 4 years, the average rent has increased by 7% per year in the North and 13% per year in the South.
Regarding the market of warehouses and ready-built factories, the supply has grown strongly in the past 3 years. In the first 6 months of 2023, a total of 0.9 million m2 of ready-built warehouses and factories in tier-1 markets in both the North and the South have been completed. In which, 60% of this supply comes from the North. Supply has grown by more than 20% per year in the North and 18-49% per year in the South over the past 4 years. Rent growth of these segments has maintained at 2-3% per year for the past 4 years as competition increases.
During the first half of 2023, supply chain disruptions and order shortages occurred in most traditional industries such as apparel and footwear. However, the electronics, information and communication technology industries, as well as the high-tech industries, still recorded the participation and expansion from foreign enterprises.
The Northern region continued to record strong demand from the electronics sector. In the first half of 2023, major manufacturers such as Foxconn and Goertek expanded their operations in industrial parks in Bac Giang and Bac Ninh. Chinese manufacturers have also expanded in other areas, contributing to the good absorption of industrial land and ready-built factories in the North.
In the South, market demand is diverse, with the automotive, apparel and packaging industries actively seeking industrial land, warehouses and ready-built factories.
CBRE Vietnam forecasts that in the future, industrial land rents are expected to increase at a lower rate than before, about 4-8% per year after a period of strong growth. Meanwhile, ready-built warehouse rents may increase slightly below 4% over the next 12 months in both regions due to higher competition from future projects.
Experts' assessment shows that the industrial real estate market is attracting interest from global manufacturers, especially in the fields of technology, green energy, and logistics.
