Industrial Real Estate 2025: Ready-built Factories Dominate the Market
With the rapid expansion of industrial parks, strong infrastructure development and attractive investment incentives, industrial real estate is an important channel to attract foreign direct investment (FDI) and promote domestic production.
Factories in industrial parks are dominant
Data from real estate consultants shows that from the second half of 2023 to now, the demand for factory rental has increased sharply thanks to the recovery of the industrial production sector and the trend of large enterprises moving to Vietnam.
According to CBRE Vietnam, in the third quarter of 2024, the occupancy rate of ready-built factories reached 84%, up 3% over the previous quarter, and the average occupancy rate of warehouses reached 68%, up 7% over the previous quarter.
In the first 9 months of 2024, the Southern Tier 1 market has leased nearly 420,000 m2 of warehouses and more than 540,000 m2 of factories, nearly double the same period last year. Ho Chi Minh City and neighboring areas such as Binh Duong, Dong Nai, Ba Ria - Vung Tau, Long An, Tay Ninh, ... are provinces and cities noted to have a vibrant market and good growth in the Southern region.
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| Ready-built factories in industrial parks are the preferred choice of investors. Photo: Le Minh Xuan 3 Industrial Park (Binh Chanh) |
Meanwhile, in industrial parks in the Northern region, the average asking rent for ready-built factories reached USD 5/m2/month in the past three quarters, up 0.6% quarter-on-quarter and 3.4% year-on-year.
Diversified quality supply sources
To meet the increasing demand for factory rental, industrial parks are actively implementing projects to increase quality supply.
According to Cushman & Wakefield's estimates, by 2027, Vietnam will have about 6 million square meters of warehouse space in operation. Most of the factory space is concentrated in key economic regions, where there is great potential to attract high-quality FDI.
However, industrial real estate has recorded uneven growth. Factories in industrial parks (IPs) have developed more rapidly than factories outside. According to analysis by market research units, most small-scale factories outside IPs do not ensure legality, fire safety, are built on land with the wrong function, wrong area, lack infrastructure, utilities, etc., so it is difficult to attract investment.
On the contrary, factories for rent in industrial parks are increasing in attraction due to their many advantages such as ensuring compliance with planning, meeting legal and environmental conditions, meeting land standards, fire prevention and fighting systems, security systems and providing full industrial infrastructure.
Saigon Investment Corporation (VRG), the investor of Phuoc Dong Industrial Park (Tay Ninh), said that pre-built factories in the industrial park are the preferred choice of investors thanks to their diverse areas, quick production operation time, and time and cost savings. In addition, investors also enjoy good incentive policies from the industrial park and local authorities.
According to the representative of Phuoc Dong Industrial Park, in the past, most enterprises rented land to build and implement projects themselves. However, recently, investors have been more interested in ready-built factory products. In 2024, more than 50,000 m2 of ready-built warehouses in the Industrial Park were absorbed. Therefore, in the upcoming planning and development strategy, Phuoc Dong Industrial Park will promote the construction of a system of modern ready-built warehouses with diverse areas to promptly meet the needs of investors.
It is expected that in 2025, Phuoc Dong Industrial Park will continue to supply the market with about 30,000 m2 of ready-built warehouses. The factories are designed to suit many different industries with diverse areas from 3,000 - 7,000 m2.
According to the Phuoc Dong Industrial Park Management Board, when handed over to the investor, the factory has ensured legal factors, fire prevention and fighting safety, met environmental standards and is fully equipped with infrastructure, and can go into production immediately.
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| The factory in Phuoc Dong Industrial Park is equipped with fire protection system, 2-storey office, industrial infrastructure. Photo: Phuoc Dong Industrial Park |
In addition, to increase competitive advantage and welcome new capital flows moving into Vietnam, Phuoc Dong Industrial Park has a strategy to innovate and diversify products.
In addition to industrial land and ready-built warehouses, Phuoc Dong Industrial Park also provides factory construction services according to customer requirements. This is also a form chosen by many investors in Phuoc Dong Industrial Park because it meets specific criteria on structure, fast construction time and is a financial solution suitable for each enterprise.
With positive signals, experts predict that the industrial real estate market will continue to develop in 2025. Increasing investor confidence, diversified product supply, improved infrastructure and preferential policies will play a key role in attracting FDI and promoting economic growth in the coming time.
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