The factory rental market in Vietnam is experiencing robust growth due to the wave of production relocation and industrial expansion. Many businesses, especially in the electronics, automotive, textile, and food industries, are opting to rent ready-built factories instead of investing in new construction to save costs and leverage existing infrastructure. Let’s explore the rising trend of factory rental demand in Vietnam with KTG Industrial.
Reasons why the need to lease factories in Vietnam?
Flexibility
Renting ready-built factories provides businesses with greater flexibility in cost management and cash flow. Instead of making a significant long-term investment in land, companies can opt for flexible payment methods ranging from quarterly to annual cycles, reducing financial pressure and stabilizing cash flow.
Moreover, many rental factories come with available utilities and services such as electricity, water, wastewater treatment systems, parking lots, and security. This allows businesses to save time and effort in organizing and operating their production activities. This advantage is particularly beneficial for small and medium-sized enterprises, enabling them to quickly start operations without requiring a large initial investment.
Additionally, renting factories allows businesses to easily expand or relocate production facilities as needed. Rental factories are often designed with flexible layouts that can be adjusted to meet production requirements. When demand changes, companies can swiftly move to another factory without incurring significant time and costs, optimizing investment efficiency.
Trends in the factory rental market in Vietnam.
Save costs
Vietnam is an attractive destination for businesses due to its significantly lower labor costs compared to Thailand, Indonesia, and China. This is a key factor in reducing overall operating expenses when renting factories in Vietnam.
Additionally, rental prices remain competitive and are notably lower than those in neighboring countries. This provides favorable conditions for businesses to expand production at a reasonable cost. Moreover, electricity costs in Vietnam are among the lowest in the region, helping businesses save on production expenses.
Renting ready-built factories offers several important benefits, especially for small and medium-sized enterprises. Instead of investing a large sum in building new factories, companies can quickly start production at a lower cost while saving time and optimizing cash flow.
Favorable geographical location
Geographical location is a crucial factor influencing operational costs, production efficiency, and the distribution capabilities of businesses. A strategically located factory enables companies to access markets more easily, optimize supply chains, and reduce transportation costs.
Factories situated near seaports, airports, industrial zones, and major transportation routes help businesses accelerate goods transportation, access abundant labor resources, and enhance production efficiency. Additionally, good infrastructure and secure systems contribute to stable and safe business operations.
Modern facilities
Renting factories allows businesses to access modern facilities without a significant initial investment. Rental factories are often equipped with essential utilities, including power systems, high-load-bearing floors, standard fire protection systems, wastewater treatment facilities, telecommunications, and high-speed internet.
Furthermore, many factory complexes are designed with flexible layouts suitable for various production models. This enables businesses to maximize space utilization, ensure efficient production processes, and meet international safety and quality standards.
Support from the Government
The Vietnamese government has implemented several policies to support businesses in renting factories and offices to promote production and trade. Specifically, according to Clause 4, Article 47 of Decree No. 118/2015/ND-CP, investors are allowed to lease and sublease factories, offices, warehouses, and other structures built for production and business activities in accordance with land and real estate business laws.
Additionally, the government has introduced tax exemption and reduction policies, as well as extensions on tax and land rental payments, to help businesses overcome challenges. Resolution No. 58/NQ-CP dated April 21, 2023, outlines measures to support businesses in proactively adapting, recovering quickly, and developing sustainably [1].
Geographic Location and Weather
Vietnam is located in Southeast Asia, boasting a strategic geographical position with a coastline of over 3,260 km. It borders China to the north and Laos and Cambodia to the west, making it a crucial trade hub in the region.
Regarding climate, Vietnam experiences a tropical monsoon climate with two main seasons: the rainy season and the dry season. In the northern region, there are four distinct seasons (spring, summer, autumn, and winter), while the southern region has a tropical climate with a rainy season from May to November and a dry season from December to April of the following year.
Thanks to its strategic location and diverse weather conditions, Vietnam is suitable for various industries, particularly manufacturing and export.
Current situation of factory rental in Vietnam
The demand for factory rentals in Vietnam is growing rapidly, driven by the expansion of industrial sectors, the rise of e-commerce, and the trend of fast delivery. The shift in global supply chains has attracted many international corporations (Queen Bee) to invest in Vietnam, including Samsung, Foxconn, Intel, Panasonic, LG, Canon, Mitsubishi, and others.
As of July 2024, Vietnam has 431 industrial parks (IPs) and export processing zones (EPZs) with a total area of 132.3 thousand hectares. Among them, 301 IPs are operational, providing 89.9 thousand hectares of industrial land. These IPs have attracted significant investment capital, contributing to economic and social development. [2]
Amid this growth, the demand for ready-built factory rentals in Vietnam has surged, driven by the development of industrial real estate. In the first four months of 2024, FDI reached USD 9.27 billion (+4.5% YoY), boosting the demand for high-quality factories. Ready-built factories are preferred due to cost savings, flexible space options, and legal support. [3]
Factories in Vietnam are becoming increasingly modern and equipped with more amenities.
According to CBRE, Vietnam supplied 513,957 m² of rental factories last year, with 70% located in the South and 30% in the North. The occupancy rate reached 81.9% in the South and 80.2% in the North, reflecting a 20% increase compared to the previous year. Thanks to policies promoting international relations, 70-80% of businesses from China, the U.S., South Korea, and the EU are seeking factory space in Vietnam, signaling continued strong market growth.
The ready-built warehouse market in Vietnam is experiencing robust growth, particularly in the segment of multi-story warehouses ranging from 1,000 to 5,000 m², catering to the needs of light industrial businesses. The logistics market size in 2024 is expected to increase by 1.6 times compared to 2023, especially in Ho Chi Minh City, where supply is under significant pressure. [4]
Industrial real estate developers are expanding their investments in ready-built warehouses, with multifunctional warehouses becoming increasingly popular. This segment is forecasted to continue booming, playing a crucial role in Vietnam’s supply chain and logistics industry.
Industries with high demand for factory rentals
Electronic
The electronics industry is currently one of the sectors with the highest demand for factory rentals, particularly in the northern region. The production expansion of major corporations like Foxconn and Goertek in industrial parks in Bac Giang and Bac Ninh has significantly contributed to the dynamic growth of the industrial real estate market.
As electronics companies continuously increase their production capacity, there is a growing need for factory and warehouse space. This demand is driving investors to develop ready-built factory models to quickly meet market requirements.
Automobile manufacturing
Vietnam’s automotive industry is expanding, leading to high demand for factories for assembly, component storage, and finished products. Industrial parks provide spacious factories with sturdy structures suitable for mechanical manufacturing. Strategic locations near ports and well-connected transportation systems help businesses optimize logistics. Additionally, the government’s industrialization support policies create favorable conditions for the industry’s growth.
The automotive industry is driving the demand for factory rentals in Vietnam.
Garment
The garment industry is one of the sectors with high demand for factory rentals in Vietnam. Companies in this field often rent ready-built factories to expand production or relocate to suburban areas to save costs. Vietnam offers strong manufacturing infrastructure and a plentiful labor supply, along with advantages from free trade agreements (FTAs) that facilitate access to European and U.S. markets. Additionally, the availability of raw materials and proximity to international shipping routes help optimize the supply chain.
Packaging
The food processing industry is growing due to abundant raw materials and increasing consumer demand. Companies renting factories in Vietnam benefit from food safety-compliant infrastructure, modern storage facilities, and advanced packaging technology.
The packaging industry also has high demand for factory rentals, especially in the southern region, due to the need for large spaces for production and storage. Renting factories enables businesses to optimize production and reduce costs.
KTG Industrial – Prestigious factory rental unit in Vietnam
KTG Industrial is one of the leading factory providers chosen by many foreign businesses.
KTG Industrial is a joint venture between Khai Toan Group (KTG) and Boustead Projects (Singapore), offering high-quality industrial real estate solutions in Vietnam. Leveraging international experience and deep local market knowledge, KTG Industrial provides ready-built factories and warehouses as well as built-to-suit solutions, meeting international standards for quality and safety.
Products & Services:
- Ready-Built Factory: Flexible space options with convenient connectivity to key economic zones.
- Ready-Built Warehouse: Modern storage systems with high load capacity, suitable for logistics and inventory management.
- Built-To-Suit Factory: Custom-designed and constructed to meet specific business needs.
Competitive Advantages:
- Strategic Locations: Projects spanning from North to South Vietnam, including Bac Ninh, Hai Phong, Ha Noi, Dong Nai, and Binh Duong.
- Superior Quality: Facilities meet international standards, featuring integrated wastewater treatment systems and solar power solutions.
- Commitment to ESG: Utilization of renewable energy, financial transparency, and community support initiatives.
Key Projects:
- Southern Region: KTG Industrial Nhon Trach, KTG Industrial An Phuoc, KTG Industrial Tam Phuoc.
- Northern Region: KTG Industrial Yen Phong I, Yen Phong II, Yen Phong IIC.
Conclusion:
The trend of renting factories in Vietnam is expected to continue rising as the government intensifies efforts to attract investment and improve industrial infrastructure. Businesses need to select suitable factories to optimize production and enhance competitive advantage. KTG Industrial is one of the most reputable factory providers in Vietnam.
References:
[1] TOÀN VĂN: Nghị quyết số 58/NQ-CP về hỗ trợ doanh nghiệp. Published 2023. Accessed February 9, 2025. https://xaydungchinhsach.chinhphu.vn/toan-van-nghi-quyet-so-58-nq-cp-ve-ho-tro-doanh-nghiep-chu-dong-thich-ung-phuc-hoi-nhanh-va-phat-trien-ben-vung-den-nam-2025-1192304211921592.htm?utm_source=chatgpt.com
[2] Phát triển khu công nghiệp và mô hình khu công nghiệp sinh thái gắn với tăng trưởng xanh, phát triển bền vững, kinh tế tuần hoàn. Mpi.gov.vn. Published 2024. Accessed February 9, 2025. https://www.mpi.gov.vn/portal/Pages/2024-8-23/Phat-trien-khu-cong-nghiep-va-mo-hinh-khu-cong-ngh0qfsuf.aspx
[3] Khánh Huyền. Nhu cầu thuê xưởng xây sẵn tăng: Các khu công nghiệp gia tăng nguồn cung chất lượng cao. Nhịp sống kinh tế Việt Nam & Thế giới. Published June 21, 2024. Accessed February 9, 2025. https://vneconomy.vn/nhu-cau-thue-xuong-xay-san-tang-cac-khu-cong-nghiep-gia-tang-nguon-cung-chat-luong-cao.htm
[3] Đan L. Tiềm năng giao dịch kho xưởng xây sẵn. Báo Xây dựng. Published August 19, 2024. Accessed February 9, 2025. https://baoxaydung.com.vn/tiem-nang-giao-dich-kho-xuong-xay-san-381882.html
