Industrial Real Estate in Vietnam: Industry Overview 2024

Vietnam’s industrial real estate sector has seen notable growth, fuelled by increasing foreign direct investment, urbanisation, and the country’s role in global supply chains. Industrial parks are concentrated in key economic regions like Ho Chi Minh City and Hanoi, attracting manufacturers and logistics companies looking to capitalise on Vietnam’s strategic location and competitive labour market. This demand has led to rising land prices and high occupancy rates in major zones.

Despite the strong demand, the sector faces challenges such as delays in land clearance, legal complexities, and competition from neighbouring countries. Additionally, global economic uncertainty and geopolitical factors create risks for sustained growth. However, infrastructure development and regulatory reforms are expected to support the sector’s continued expansion, solidifying its role as a key driver of Vietnam’s economic development.

Industrial real estate in Vietnam data

Vietnam’s commercial real estate market is projected to reach a market value of US$49 billion in 2024 and is expected to grow at a compound annual growth rate of 2.34 percent, reaching US$55 billion by the end of 2029, according to Statista. 

Industrial rents per square metre

Source: CBRE Markets Report

Ready-built factory rents per square metre

Source: CBRE Markets Report

Average rents, select industrial parks, Q3 2024

Source: Ministry of Construction

Foreign FDI in Vietnam’s real estate industry

In October 2024, Vietnam’s real estate sector recorded a significant increase in foreign direct invested projects, with nine new projects compared to just two in September, according to Ministry of Planning and Investment data. However, the sector’s registered capital in October saw a decline of 16.91 percent from the previous month, totalling US$846.43 million compared to September’s US$1.02 billion.

Year-to-date, the real estate industry has attracted 64 projects, with cumulative capital reaching approximately US$5.23 billion, reflecting strong interest from foreign investors despite fluctuations in monthly capital inflows.

Domestic industrial real estate firms in Vietnam

Vietnam’s industrial real estate sector has seen significant growth, driven by domestic firms that develop and manage industrial parks and infrastructure. Notable companies include:

Becamex IDC Corp

A state-owned enterprise established in 1976, Becamex IDC specialises in industrial, urban, and transportation infrastructure development. It has developed numerous industrial parks, notably in Bình Dương Province, attracting both domestic and foreign investors.

Kinh Bac City Development Holding Corporation (KBC)

Founded in 2002, KBC focuses on developing industrial zones and urban areas. Its prominent projects include the Quang Chau Industrial Park in Bac Giang Province and the Trang Due Industrial Park in Hai Phong City, which have attracted significant foreign direct investment.

Tan Tao Group

Established in 1993, Tan Tao Group is a leading industrial park and infrastructure developer in Vietnam. Its flagship project, Tan Tao Industrial Park in Ho Chi Minh City, has been instrumental in attracting manufacturing enterprises.

Sonadezi Corporation

With over 30 years in operation, Sonadezi has developed multiple industrial parks, primarily in Dong Nai Province. The company provides comprehensive infrastructure and services, supporting various industries.

Viglacera Corporation

Initially a building materials manufacturer, Viglacera has expanded into industrial park development. It operates several industrial parks across the country, offering facilities for diverse industrial sectors.

These domestic firms play a crucial role in Vietnam’s industrial real estate landscape, contributing to the country’s economic development and its integration into global supply chains.

Foreign industrial real estate firms in Vietnam

Vietnam’s industrial real estate sector has attracted significant interest from foreign firms, contributing to the country’s economic development and integration into global supply chains. Notable international companies operating in Vietnam include:

Savills Vietnam

A subsidiary of the UK-based Savills plc, Savills Vietnam offers comprehensive industrial real estate consultancy services, including brokerage and advisory support for developers, investors, and tenants. The firm has been instrumental in facilitating foreign investments and providing market insights to clients navigating Vietnam’s industrial property landscape.

Colliers International Vietnam

Part of the global real estate services company Colliers International, the Vietnam branch provides a wide range of services encompassing industrial, residential, retail, and office properties. Colliers International Vietnam has managed notable projects and serves clients in major cities like Ho Chi Minh City and Hanoi, assisting foreign investors in establishing and expanding their industrial operations.

Cushman & Wakefield Vietnam

As a global real estate services firm, Cushman & Wakefield operates in Vietnam, offering expertise in property management, facilities services, and investment management. Their presence underscores Vietnam’s growing importance in the regional real estate market, providing foreign investors with essential services to navigate the industrial sector.

Knight Frank Vietnam

Operating in one of Asia’s fastest-growing markets, Knight Frank Vietnam provides a full spectrum of commercial advisory services. They support owners, occupiers, investors, and developers across various aspects of commercial real estate, focusing primarily on Ho Chi Minh City and Hanoi.

These firms contribute significantly to Vietnam’s industrial real estate sector by setting international standards and facilitating foreign investments, reinforcing Vietnam’s position in global supply chains.

Industrial real estate regulations in Vietnam

Vietnam’s industrial real estate sector is governed by comprehensive building codes and fire safety regulations to ensure the safety of occupants and properties. The primary framework is established by the National Technical Regulation on Fire Safety for Buildings and Constructions (QCVN 06), which outlines mandatory fire safety standards for various types of buildings, including industrial facilities.

Key Provisions of QCVN 06:

• Scope and Application: QCVN 06 applies to all phases of construction, renovation, repair, or functional changes in buildings. It specifies general requirements for fire safety in rooms, buildings, and construction works, ensuring that safety measures are integrated from the design stage through to occupancy.
• Fire Hazard Classification: Buildings are classified into functional fire hazard categories (e.g., F5.1 for manufacturing facilities and F5.2 for warehouses). This classification determines the specific fire safety requirements applicable to each building type, ensuring that measures are tailored to the inherent risks of different functions.
• Human Safety Assurance: The regulation mandates unobstructed evacuation routes, adequate emergency exits, and the installation of fire detection and suppression systems. These measures are designed to facilitate timely evacuation and effective firefighting operations, thereby protecting human life.
• Fire Resistance and Compartmentalisation: QCVN 06 sets standards for the fire resistance of building materials and structural components. It also requires the division of buildings into fire compartments to prevent the spread of fire and smoke, enhancing the overall resilience of structures during fire incidents.
• Smoke Control and Ventilation: The regulation includes provisions for smoke control systems and the design of ventilation to limit smoke propagation during a fire, thereby maintaining visibility and reducing inhalation risks for occupants and responders.
• Water Supply for Firefighting: Adequate water supply systems must be in place to support firefighting efforts, including the installation of fire hydrants and internal sprinkler systems, ensuring that sufficient resources are available to control and extinguish fires.

Recent Updates:

The Ministry of Construction periodically updates QCVN 06 to address emerging challenges and incorporate advancements in fire safety. For instance, Circular No. 06/2022/TT-BXD, effective from January 16, 2023, introduced amendments to enhance fire safety standards, reflecting the government’s commitment to improving building safety.

Compliance and Enforcement:

Industrial real estate developers and operators are required to adhere strictly to these regulations. Non-compliance can result in penalties, project delays, or revocation of operational licenses. Authorities conduct regular inspections to ensure adherence, underscoring the importance of integrating fire safety measures into all stages of industrial real estate development.

By maintaining rigorous building codes and fire safety regulations, Vietnam aims to protect occupants, safeguard property, and promote sustainable industrial growth.

What’s next?

Vietnam’s industrial real estate market has been evolving, driven by urbanisation, economic shifts, and increasing foreign investment. Key regions such as Ho Chi Minh City and Hanoi dominate the sector, with industrial parks and logistics hubs in high demand due to the influx of multinational manufacturers and Vietnam’s growing role in global supply chains. These facilities cater to sectors such as electronics, textiles, and automotive production, bolstered by trade agreements and competitive operating costs.

All of that said, Vietnam’s industrial real estate market can be dynamic and change quickly. With this in mind, to keep up with the latest developments in Vietnam’s industrial real estate space, foreign firms should make sure to subscribe to the-shiv.