The lease prices of industrial real estate could rise 6-10% a year in both the Northern and Southern regions of Vietnam over the next two years, spurred by high demand from different sectors.

Vietnam’s industrial real estate market is heating up due to healthy absorption of industrial land, ready-built factories and warehouses.

According to CBRE Vietnam's commercial real estate market report for the third quarter of 2023, the occupancy rate of land at industrial parks in the southern region reached 81.9%, while industrial land absorption topped 190 hectares, up 5.9% from the previous quarter.

The average land rent price in the tier-1 market was 189 USD per sq.m, up 1% quarter-on-quarter, and 13% year-on-year. Large transactions were made by Chinese and Japanese enterprises, investing in the fields of mechanics, chemicals, plastics, rubber, and electronics.

In the North, the occupancy rate in the tier-1 market was 80.2%, down 2.4% as compared to Q2 and up 0.4% year-on-year. Most of the industrial land lease rents came from garment and textile, contact lenses and plastic production enterprises.

During the January – September period, the absorption was more than 700 hectares, or 18% higher than the figure for the whole 2022.

Land rent prices at industrial parks in the North trended upward thanks to growing demand.

More than 1.2 million sq.m of warehouse and factory space was delivered to the market during the nine-month period, with the average leasing price of 4.5 USD per sq.m for warehouse space, and 4.9 USD for factory space in the southern market.

Investors from China, Vietnam, Japan, the U.S. and the E.U. accounted for up to 80% of the number of customers seeking industrial space through CBRE.

As Vietnam continues to consolidate cooperative ties with its comprehensive strategic partners such the U.S., the Republic of Korea and China, renters from these countries will lead the industrial market in the time ahead.

Deputy Director of CBRE Vietnam’s Research and Consulting Department Pham Ngoc Thien Thanh said that demand for warehouse space saw strong recovery in Q3, with large transactions from logistics enterprises.

In the future, sustainable development and advanced technology will draw the attention of investors and businesses, she said, adding green criteria has become important to develop factories and warehouses, contributing to the development of green industrial parks in the future.

Meanwhile, Head of Research and Consulting at JLL Vietnam, Trang Le pointed to positive signs in the warehousing market in the South for the remaining months of this year, with the net absorption rate of about 86,000 sq.m.

More than 460,000 sq.m of ready-built warehouse space will be added to the Southern market in Q4, bringing the total to 2.3 million sq.m by the end of this year.

In short term, domestic consumption will be the driver for the warehousing market, Trang Le said.

Source: VNA