Industrial real estate to remain on growth path

Rising public investment in infrastructure is also expected to drive rents up. Spending is expected to increase by 20-30 percent this year, with many large projects expected to be taken up this year.

The e-commerce boom and diversification of the supply chain is creating new demand for industrial land for warehousing.

According to the Ministry of Industry and Trade, Vietnam’s e-commerce will grow at an annual rate of 44.9 percent from 2020 to reach a value of US$52 billion by 2025.

A CBRE Asia report estimated that for every $25-27 billion worth of e-commerce revenues, 350,000 sq.m of warehouse space would be needed.This means Vietnam will require at least 700,000 sq.m of new warehouse space by 2025.

Transport expenses account for 45-70 percent of supply chain costs, which means that warehouses located near major traffic hubs will be in huge demand.

Supply of industrial land is expected to increase by 44,760 hectares in 2022-25 to meet the increasing demand, VNDirect said.

Annual profits for warehouses and factories in 2021-23 would grow by 22 and 14 percent in the south and 46 and 10 percent in the north, VNDirect estimated.