The cost of renting factories in the Southeast Asia has become a major concern for manufacturing and logistics businesses. With the rapid development of the region, rental prices differ significantly among countries such as Vietnam, Thailand, Singapore, Malaysia, and Indonesia. KTG Industrial provides an overview of pricing, influencing factors, and market trends to help businesses make informed decisions.
Factory leasing cost in Southeast Asia
Vietnam
Vietnam has been attracting attention in the industrial real estate market as factory rental prices continue to rise. The key factors contributing to this trend include:
- Strategic location: Proximity to major manufacturing hubs.
- Low labor costs: A key driver of foreign investment.
- Government incentives: Tax benefits and infrastructure development support.
Additionally, foreign direct investment (FDI) from countries such as South Korea, Japan, and China continues to flow into Vietnam, further fueling market growth.
Renting a factory in Vietnam offers numerous advantages for businesses. First, Vietnam’s strategic location near key production centers in China and Southeast Asia facilitates trade and logistics. Additionally, enterprises benefit from a well-established legal framework ensuring regulatory compliance. Moreover, Vietnam’s rental rates remain competitive compared to other regional markets, allowing businesses to optimize costs and profitability.
Images at KTG Industrial Yen Phong IIC
In Q1/2024, despite trade stagnation, industrial land rental prices in Vietnam maintained an upward trend. Rental rates for ready-built factories in Vietnam range from $4-$7/m²/month, while long-term industrial land leasing costs reached $133/m² in the North and $189/m² in the South (Q1/2024, CBRE). The occupancy rates of industrial zones in the North and South were 83% and 92%, respectively.
Additionally, rental prices for ready-built warehouses have recorded an annual increase of 1-4%, despite being affected by trade slowdowns.
Over the next three years, industrial land rental prices are expected to rise by 3-9% per year in the North and 3-7% per year in the South. In the short term, the southern region anticipates an additional 270,000 m² of new warehouses and factories, while the North will add approximately 185,000 m² [1].
ThaiLand
Post-pandemic, the demand for factory rentals in Thailand has been rising. The market is primarily divided into two categories:
- Ready-Built Factories (RBF):
- Pre-constructed and available for lease.
- Easier to rent, though supply is limited as developers focus on Build-to-Suit (BTS) projects.
- Second-Hand Factories:
- Previously owned by businesses.
- May require renovation but offer flexible locations and customization options.
- Must be carefully reviewed for legal documentation, zoning, and operational conditions before leasing.
According to JLL, the average rental price for ready-built warehouses in Thailand reached 159.3 THB/m²/month in Q1/2024, marking a 0.79% increase from the previous quarter. Prices in some areas are higher due to supply-demand variations across different locations.
Leasing Considerations in Thailand
Before signing a lease agreement, tenants should thoroughly review contract terms to understand their rights and obligations. Under Thai law, once a lease is signed, both parties must adhere to its terms, regardless of their understanding of the content.
- Lease agreements typically last for three years. Longer leases must be registered with the Land Department and are subject to taxation.
- It is recommended to have a Thai-language contract translation to prevent misunderstandings.
- Withholding tax on factory/warehouse rentals is 5%, usually borne by the tenant.
- Additional costs include property insurance, management fees, and utility surcharges.
Singapore
Singapore offers a wide range of rental factory options, with prices varying between 15.06 and 48.42 SGD/m²/month, depending on location, size, and type of industrial property (B1 for light industry, B2 for heavy industry). Leasing a production facility in Singapore provides numerous advantages for businesses due to its favorable business environment, advanced infrastructure, and strategic location.
Benefits of Leasing a Production Facility in Singapore
- Cost-saving solution: Reduces initial investment, allowing businesses to focus on key activities such as R&D, marketing, and human resources.
- Advanced infrastructure: Rental facilities come equipped with essential utilities, including electricity, water, waste management, and high-speed internet.
- Strategic location and connectivity: Proximity to major trade routes, seaports, airports, and a well-developed transportation network optimizes supply chain efficiency.
Types of Rental Production Facilities
- Industrial parks: Provide manufacturing spaces, warehouses, offices, and R&D centers, fostering collaboration between businesses.
- Business parks: Integrate manufacturing and office spaces, ideal for high-tech enterprises.
- Standalone factories: Custom-designed facilities tailored to specific production needs.
Singapore remains an ideal destination for businesses seeking high-quality industrial spaces with well-developed infrastructure and attractive business support policies.
Malaysia
One of the major advantages of investing in rental industrial real estate in Malaysia is its high return on investment. As of Q3/2024, the rental yield for industrial properties in Malaysia reached 5.24%, significantly higher than in many other Southeast Asian countries. This allows investors to recover capital quickly and generate stable cash flow.
Warehouse rental prices in Malaysia are also very competitive.
Competitive Rental Prices
Malaysia’s strategic location in the heart of Southeast Asia, near economic powerhouses such as Singapore, Thailand, and Indonesia, attracts international labor and experts, creating strong demand for rental properties.
Additionally, Malaysia’s flexible property ownership policies provide an advantage. Unlike Thailand or Indonesia, where foreigners can only secure long-term leases, Malaysia allows foreign ownership of real estate under relatively straightforward conditions.
Industrial Rental Prices Across Malaysia
The cost of leasing a factory in Malaysia varies significantly by state, depending on location and industrial development level. Below are rental rates for available factories in different Malaysian states, measured in Malaysian Ringgit (RM) per square foot per month. Converted to USD (at an exchange rate of approximately 1 RM ≈ 0.21 USD), the corresponding prices are:
- Perlis: RM0.75 (~$0.16)
- Kedah: RM0.50 – RM0.70 (~$0.11 – $0.15)
- Penang:
- Island: RM1.50 – RM3.50 (~$0.32 – $0.74)
- Mainland: RM1.00 – RM2.00 (~$0.21 – $0.42)
- Selangor: RM1.50 – RM3.00 (~$0.32 – $0.63)
- Johor: RM1.20 – RM3.00 (~$0.25 – $0.63)
These prices are subject to change based on specific location, infrastructure conditions, and market demand at a given time.
With these advantages, Malaysia is emerging as an attractive destination for international industrial real estate investors.
Indonesia
Selecting the right warehouse location is a crucial factor influencing business efficiency. North Jakarta is an ideal area, with key locations such as Tanjung Priok and Marunda offering proximity to international ports and convenient goods transportation. East Jakarta is another strong option, featuring industrial zones like Pulo Gadung, Cililitan, and Jalan Raya Bekasi Barat, which provide easy access to industrial hubs and business centers.
Meanwhile, West Jakarta benefits from its proximity to Soekarno-Hatta International Airport but faces high population density and limited container transport access. Other areas such as Tangerang, Cengkareng, Bekasi, Bogor, Depok, and Cikarang offer lower warehouse rental costs but may require more flexible logistics solutions.
Industrial Land Rental Prices in Indonesia
- Key industrial zones, including Bogor-Sukabumi, Tangerang, and Bekasi, have an average rental rate ranging from 157 to 295 USD/m² per lease term (typically 25 years or subject to specific regulations).
Factors affecting factory rental costs in Southeast Asia
Geographical location
Rental prices are significantly influenced by geographic location. Factories situated near major transportation routes, industrial parks, seaports, airports, and logistics hubs command higher rents due to logistical advantages. Additionally, areas with a plentiful labor supply attract more businesses, leading to increased rental rates.
According to CBRE (2023), rental prices in key industrial zones tend to be higher than those in inland areas. Vietnam remains a top investment destination in the Asia-Pacific region, with Ho Chi Minh City ranking in the top 3 and Hanoi in the top 10 for investment attraction [2].
Workshop area and facilities
Size and infrastructure play a critical role in rental pricing. Larger facilities typically come at a premium due to their enhanced infrastructure, modern equipment, and optimized production space.
Other factors, such as building quality, utility systems, fire protection (PCCC), and safety standards, also impact rental costs. Factories meeting stringent operational and environmental regulations often have higher rental rates.
Infrastructure and support services
Amenities and support services are key determinants of rental prices. Facilities offering 24/7 security, professional property management, ample parking, and regular maintenance provide businesses with operational efficiency and safety.
Additionally, services such as waste management and infrastructure maintenance contribute to a sustainable working environment. While these features may increase rental costs, they add significant value and enhance operational performance for businesses.
Rental period and payment method
The length of the lease and payment structure are crucial in determining rental costs. Long-term lease agreements often offer more favorable rates, as landlords prefer stability and reduced tenant turnover risk. Moreover, flexible payment terms, such as upfront payments for discounts, can help businesses optimize costs.
Competition level
Market competition directly affects rental pricing. A higher number of available facilities can lead to more attractive leasing conditions, improved services, and potential rent reductions as landlords compete for tenants. This benefits businesses by providing a wider selection and better negotiation opportunities.
By considering these factors, businesses can make well-informed decisions when selecting rental properties, ensuring optimal operational efficiency and cost-effectiveness.
Warehouses come in a variety of prices and sizes.
How to calculate factory rental price
Warehouse rental prices are determined by multiple factors, including location, area, infrastructure, and lease duration.
Determining the Total Usable Area: This includes the production area, storage facilities, office space, and auxiliary areas.
Cost Calculation:
- Initial investment costs
- Operating costs: Maintenance, electricity, water, security, management, etc.
- Desired profit margin: Based on market conditions and competitive dynamics.
Rental Price Calculation:
- Sum the total costs and the desired profit margin.
- Divide by the total leasable area.
- Adjust based on real-world conditions: Rental prices may vary depending on location, available amenities, and lease duration.
Benefits: Understanding rental price calculations enables businesses to select the most suitable warehouse, optimize costs, and enhance operational efficiency.
Development situation in Southeast Asian countries
Despite global economic downturns, geopolitical tensions, and fragmented trade, Southeast Asia remains a promising region, driven by strong manufacturing exports and public investment.
Vietnam continues to attract foreign direct investment (FDI), while economies such as Indonesia and the Philippines maintain expected growth rates. However, the region still faces significant risks, including trade conflicts, natural disasters affecting agriculture, and infrastructure challenges.
- Indonesia, the largest economy in Southeast Asia, is experiencing reduced household consumption due to a shrinking middle class.
- Thailand is recovering from the COVID-19 pandemic, but low domestic consumption and rising household debt pose challenges.
- Even Malaysia and Vietnam, despite strong economic performance in 2024, may struggle to sustain growth momentum and attract continued investment [3].
Thailand has committed USD 45 billion to infrastructure upgrades, focusing on transportation and creating 154,000 jobs. The plan includes the Thailand-China high-speed railway, projected to contribute 2.35% to GDP [4].
Overall, amid the risks of trade wars, Southeast Asia must diversify its markets to sustain growth. HSBC forecasts that by 2029, Southeast Asia’s economy will surpass Japan’s, driven by innovation and global value chain expansion. Despite existing challenges, the region enters 2025 with strong growth opportunities.
KTG Industrial – Factory rental solution in Southeast Asia
KTG Industrial has emerged as a preferred warehouse leasing solution for businesses.
A joint venture between Khai Toan Group (Vietnam) and Boustead Projects (Singapore), KTG Industrial is a pioneer in Vietnam’s industrial real estate sector. With a mission to enhance industrial and logistics value chains, KTG Industrial provides ready-built warehouses, ready-built factories, and build-to-suit factories tailored to the diverse needs of domestic and international businesses.
KTG Industrial’s projects are strategically located in key economic regions such as Dong Nai and Bac Ninh, ensuring seamless connectivity to airports, seaports, and major consumer markets. The company is committed to delivering international-standard construction quality, optimizing designs for operational efficiency, and implementing sustainable solutions, including rooftop solar systems, energy-efficient buildings, and advanced wastewater treatment systems.
For businesses seeking high-quality warehouse and factory solutions in Vietnam, KTG Industrial is a trusted partner for long-term growth.
Conclusion
Warehouse rental prices in Southeast Asia are influenced by multiple factors, including location, infrastructure, incentives, and market demand. Vietnam remains a top choice due to competitive rental rates and a favorable investment environment. To optimize costs and business efficiency, companies must carefully evaluate location options before making leasing decisions.
References
[1] Ban Mai. “Industrial Land: Rental Prices May Increase by 3-9% Annually.” Nhip Song Kinh Te Vietnam & The World. Published April 19, 2024. Accessed February 24, 2025. https://vneconomy.vn/dat-cong-nghiep-gia-thue-co-the-tang-3-9-nam.htm
[2] “Vietnam Real Estate Market Outlook: Challenges on the Road to Recovery.” Accessed February 24, 2025. https://www.cbrevietnam.com/-/media/project/cbre/dotcom/asiapacific/vietnam-emarald/insights/2023-vietnam-market-outlook-2023_vn.pdf
[3] LINH Y. “Expectations for a Resilient Southeast Asia in 2025.” Nhan Dan Online. Published January 6, 2025. Accessed February 24, 2025. https://en.nhandan.vn/expectations-for-a-resilient-southeast-asia-in-2025-post143056.html
[4] Duc Cuong. “Thailand Invests USD 45 Billion in Infrastructure Upgrades.” Bao Dien Tu VTV. Published January 25, 2022. Accessed February 24, 2025. https://vtv.vn/kinh-te/thai-lan-chi-45-ty-usd-nang-cap-co-so-ha-tang-20220125001530221.htm?utm_source=chatgpt.com
