Demand for logistics real estate in Vietnam grows promptly


According to recent survey by Savills, Vietnam's logistics industry is growing rapidly due to the development of the national economy, the manufacturing sector and e-commerce. This is one of the factors that makes logistics real estate’s demand increases sharply.

Vietnam's transport and logistics market is estimated to grow at CAGR of 7% from 2021 to 2026. Vietnamese government encourages manufacturing enterprises and attracts investment by establishing industrial zones and economic zones.

Currently, many businesses are facing challenges in finding locations. Industrial parks and logistics areas, especially around big cities like Hanoi, are having high occupancy rates, reaching nearly 100% in various landmarks. The supply of industrial real estate is in shortage compared to the increasing demand of businesses.

In addition, Vietnam's logistics industry has not yet reached its full potential when most of the participants are SMEs, providing low value-added services...

Among 3,000 logistics companies, 90% of them have registered capital less than 440,000 USD, 5% are between 440,000 USD and 880,000 USD, only 5% of businesses over 880,000 USD.

While the domestic market has fierce competition, the market coordinated by foreign companies accounts for lower volume but gains larger revenue approx. 75%. 

In early 2022, Logos Property - international logistics warehouse developer, participated into a joint venture with Manulife Investment Management in the project to establish a modern built-to-suit logistics factory covered ​​over 116,000 square meters and valued over 80 million USD.

The appearance of international businesses has improved the quality of construction and operation of industrial real estate in Vietnam.

High-tech manufacturing and clean industry are the current development trend of the industry. For example, Nam Binh Xuyen Industrial Green Park in Vinh Phuc is invested in building landscapes, green spaces, and integrating smart management system. Thereby, the project attracts businesses in clean production, using natural and renewable energy.

According to Mr. Matthew Powell – Director of Savills Hanoi, Vietnam is orienting its industry along the value chain, focusing on products that bring great value-added. High-tech and sustainable production industry are attracting and prioritizing investment capital.

Businesses in this field often have more stringent requirements. Their activities in Vietnam help driving the industry's development towards sustainability, along with improving manpower’s skill.

However, with the current situation of limited supply, experts suggest that Vietnam needs to find solutions that promptly catch up with operational demand and new trends in the field of warehousing logistics.

In fact, many localities now offer preferential to attract investment capital in high and clean technology industry. Administrative procedures are also a point that can be improved to help commercial activities be fast and neat.

On the other hand, accessibility is also seen as the prerequisite for the logistics industry. Not only at the production stage, the transport also determines the success of the supply chain.

For the real estate industry, the important factor lies in the supply for logistics. Many project developers have been working with experts around the world to apply increase business efficiency methods.

Also from Mr. Powell, investors in Vietnam industrial real estate are focusing on solutions to optimize business performance.

They consult experts from developed regions such as the US, UK, Japan, Singapore, Australia to offer improvements in design and operation, which suitable with the needs of logistics businesses.

Efforts from the Government and businesses, Vietnam's logistics industry is expected to make great strides in the coming time.


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