Local Experts Predict Industrial Segment Will Revitalize the Real Estate Market in 2024
Local analysts are optimistic that the industrial real estate sector will lead the recovery of the property industry in 2024, especially as other segments struggled in 2023. The anticipated growth in this segment is supported by rising demand from various industrial sectors and foreign investments pouring into Vietnam.
Rising Rental Prices and Increasing Supply
Recent reports from CBRE Vietnam highlight that rental prices for industrial properties are projected to increase by 3% to 9% over the next three years. This growth is expected to vary by region; the northern area may see annual gains of 5% to 9%, while the south could experience increases of 3% to 7%. The strong demand for industrial spaces is primarily driven by thriving sectors like semiconductors and electric vehicles, with many localities prioritizing investments in these areas.
Additionally, ready-built warehouses and factories are also on the rise, with rental prices expected to increase by 1% to 4% per year. Dinh Le Hanh, Chairwoman of Dinh Le Group, confirms that the highest rental prices in the northern region currently reach around $160-$170 per square meter, while in the southern region, they range from $180 to $200 per square meter.
Sustained Occupancy Rates
A report by Savills Vietnam indicates that industrial parks across the country achieved an impressive occupancy rate of over 80% in 2023. Key provinces in the northern region reported an 83% occupancy rate, while southern regions reached an even higher 91%. This high demand is further evidenced by the opening of seven new industrial parks and 13 under construction, bringing the total number to 412 across 217,500 hectares of land.
Such infrastructure growth has translated into substantial interest from both domestic and foreign investors. There are over 10,400 domestic projects and more than 11,200 valid foreign direct investment (FDI) projects registered in industrial parks, highlighting the sector’s robust appeal.
Positive Investment Climate
According to the Vietnam Association of Realtors, industrial real estate has maintained its prime position in 2023, with impressive statistics showcasing the sector’s potential. FDI in industrial parks has made up approximately 35% to 40% of the total additional registered FDI capital in recent years, significantly stimulating local economies and supporting infrastructural development.
The continuous inflow of investment capital is anticipated to drive the industry further in 2024. A key aspect of this growth is the focus on industrialization within provincial planning, making this sector a vital component of the overall property market’s revival.
An Optimistic Outlook for 2024
Experts like Dr. Vu Dinh Anh from the Institute of Economics and Finance predict that the industrial property segment will continue to thrive in 2024, driven by favorable investment conditions. Nguyen Quoc Anh, the Deputy General Director of Batdongsan.com.vn, shares this optimism, identifying not just industrial real estate but also residential projects catering to workers and professionals as critical areas for market recovery.
Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors, echoes these sentiments, underlining that Vietnam is developing various driving forces that will contribute to the sector’s growth. These include positive FDI inflows, improved transportation infrastructure, and upgraded support services within industrial zones.
Projected Rental Price Increases
Looking ahead, Dinh Le Hanh from Dinh Le Group forecasts that industrial land rental prices will see increases of 6% to 10% annually in the north and 4% to 8% in the south from 2024 to 2025. The demand is expected to remain strong, particularly for multi-story warehouses and ready-built factories, all of which contribute significantly to the local economies.
A Sector Vital for Economic Growth
As a crucial player in economic and social development, industrial real estate stands to support both production and distribution activities in the coming years. The focus on modernization and industrialization creates fertile ground for significant growth in the sector throughout 2024 and beyond. Local insiders are clear on one point: the industrial real estate segment is not just reviving the property market; it is poised to become a cornerstone of Vietnam’s economic landscape.