by position.vn 
The industrial real estate market in Northern Vietnam is experiencing a significant upturn, driven by increasing demand from Chinese investors since China reopened its doors. Over the past six months, the number of inquiries for industrial land, warehouses, and factories from Chinese tenants has surged, marking a dynamic period of growth in the sector.
Northern Vietnam has managed to maintain its appeal for investors due to its strategic location and investment potential, attracting a wave of investments across various provinces. Leading the pack are provinces like Quang Ninh and Hai Duong, benefiting from readily available industrial land at competitive rental rates.
Moderate Rental Increases
In the latest real estate market report for Q2 2023, Ms. Duong Thuy Dung, CEO of CBRE Vietnam, highlighted the limited availability of industrial land for handover in both the northern and southern regions. This shortage of supply is paired with robust demand, resulting in significant rental price growth in both the North and South during the first half of 2023.
Specifically, the average rental price for Grade 1 industrial land in the North currently stands at around $127 per square meter per lease term, while in the South, it averages $187 per square meter per lease term.
Regarding demand, the northern region continues to witness strong demand from the electronics sector. In the first half of 2023, major manufacturers such as Foxconn and Goertek expanded their operations within industrial zones in Bac Giang and Bac Ninh.
Additionally, the considerable expansion of Chinese manufacturers across various sectors has further bolstered the absorption of industrial land and pre-built factories in the northern region.
Diverse Demand in the South
Conversely, the southern market presents diverse demand. Tenants from the automotive, textile, and packaging industries are actively seeking industrial land, warehouses, and pre-built factories in the South.
Strong Absorption Rate for Chinese Tenants Due to Expansion
During the first half of 2023, disruptions in supply chains and order shortages were primarily observed in traditional industries such as textiles and leather footwear. However, the electronics, information technology, telecommunications, and high-tech industries continue to experience participation and expansion by foreign businesses.
As a result, the industrial real estate market is marked by several positive indicators. Mr. Le Trong Hieu, Director of Office and Industrial Real Estate Advisory at CBRE Vietnam, noted the heightened activity in the northern industrial real estate market following China’s reopening. This uptrend is evident in the substantial increase in inquiries from Chinese tenants for industrial land, warehouses, and factories in the first six months of this year.
“CBRE statistics show a 33% increase in demand for industrial land rentals from Chinese tenants. Moreover, the majority of industrial real estate transactions in the northern region involve Chinese customers, particularly focusing on sectors that Vietnam is keen to attract, such as technology, especially suppliers for major tech giants like Apple and Samsung,” Mr. Hieu shared.
Challenges and Future Prospects
However, Mr. Hieu also pointed out that the industrial real estate market still faces certain challenges, such as legal issues. Prolonged land pricing processes have restricted new supply entering the market, causing rental prices to rise.
To maintain its attractiveness for investments, northern provinces have expedited the completion and publication of comprehensive master plans and development directions to prepare for a significant future supply of industrial land (2023-2026), estimated to increase by nearly 5,000 hectares.
In the 2023-2026 period, the northern region is anticipated to receive 1.4 million square meters of factories and 0.7 million square meters of warehouses. The demand for these properties is expected to remain high if the northern region continues to attract investments.
In the southern region, despite the absence of new industrial land supply in the latter half of 2023, approximately 1,800 hectares of new industrial land will become available in 2024, primarily in provinces like Binh Duong, Dong Nai, and Long An. Future industrial land supply is projected to significantly increase, reaching 5,254 hectares by 2026, following the completion of adjustments to overall planning and development directions by local authorities.
Conclusion
In conclusion, the industrial real estate market in Northern Vietnam is witnessing a substantial surge in Chinese demand, driven by the reopening of China’s economy. This trend is reflected in the significant increase in inquiries for industrial properties, particularly from Chinese tenants, in the region. Despite certain challenges, the market’s future prospects appear promising, with both the North and South poised for continued growth in the industrial real estate sector.
