In a market report for the first half of 2024, Nguyen Hoai An, Senior Director of CBRE Hanoi branch, highlighted the positive developments in the industrial real estate sector.

Electronics manufacturers are leading the market in the North, with significant transactions from companies like Victory Giant and Foxconn in Bac Ninh. Additionally, major factories have begun construction, including Pandora's factory in Binh Duong, Suntory Pepsico's factory in Long An, and SK's factory in Hai Phong.

A growing segment within the industrial real estate market is the demand for data centers. Thomas Rooney, Senior Manager of Savills Hanoi's Industrial Real Estate Division, noted that foreign businesses are increasingly seeking locations for data centers in Vietnam. Chinese tech giant Alibaba announced plans to build a data center, investing over $1 billion in the project. Previously, Amazon Web Services launched edge data centers in Hanoi and Ho Chi Minh City.

According to CBRE, industrial land prices in tier 1 markets in the North increased by 0.3% from the previous quarter and 4.5% year-on-year, reaching an average of $134/m² of remaining lease term. In the South, prices are $173/m² of remaining lease term, stable from the previous quarter and up 1% from the previous year.

In the first half of the year, 220 hectares were leased in the North, bringing the occupancy rate to 83%. Electronics manufacturers continue to lead this market segment. In the South, the occupancy rate remains stable at 89%, with 259 hectares. Manufacturers are expanding into markets like Long An and Ba Ria Vung Tau, where land availability is higher and rental rates are more competitive.

For the ready-built warehouse market in the North, approximately 225,000m² was recorded in the first half of the year, with ready-built factory space accounting for 95%. The lease rate for ready-built factories was four times higher than that of warehouses. By the end of Q2, the occupancy rate for ready-built factories reached 89%, while warehouses maintained a rate of 79%. Rental rates for ready-built factories were $4.9/m²/month, up 1.9% year-on-year, while warehouses were $4.6/m²/month. Major tenants in these spaces include electronics, semiconductors, furniture, and logistics industries.

According to JLL, the second half of 2024 is expected to see significant new supply in the ready-built warehouse market in the North, with approximately 131,000m² available for lease in Bac Ninh and Hung Yen. Notable projects include Frasers Hung Yen, Thuan Thanh 3B Industrial Park, and SLP Park Thuan Thanh II, bringing the total market supply to over 1.3 million m² by the end of 2024.

In the South, no new supply of ready-built warehouses was recorded, while 371,000m² of ready-built factories were added in major projects in Binh Duong and Dong Nai. Rental rates for warehouses and factories reached $4.5 and $4.9/m²/month, respectively. The primary tenants of ready-built warehouses are high-tech and renewable energy companies, along with e-commerce firms.

Nguyen Hoai An anticipates industrial land rental rates to increase by 5-8% in the North and 3-7% in the South over the next three years. Ready-built warehouse and factory rents are expected to rise by 1-4%, with factory rents increasing more significantly over the next three years.

"With the development of transportation infrastructure, the industrial real estate market is expanding into new areas such as tier 2 markets and border economic zones. Additionally, the expansion of existing investors and the entry of many new investors will make the industrial real estate market increasingly vibrant in the coming period," An said.

Duy Anh