10-01-2025

What is Industrial Real Estate: Guide To Explore

The industrial sector in Vietnam is experiencing consistent growth year over year. According to the General Statistics Office, the industrial production index for the first ten months of 2024 is estimated to have increased by 8.3% compared to the same period in 2023 [1]. This growth drives the rising demand for industrial real estate in Vietnam. But what exactly is industrial real estate? This is a unique asset type that has garnered significant interest from investors seeking to dominate the market. Let’s explore this topic in detail with insights from KTG Industrial.

What is Industrial Real Estate?

Industrial real estate refers to intangible assets formed from production and business activities in the industrial sector. These include warehouses, rental factories, office spaces, urban zones, and land development projects designed to support industrial activities.

Moreover, data from the General Statistics Office highlights the added value growth rates of the industrial sector in 2024 by quarter: 6.47% in Q1, 8.78% in Q2, and 9.59% in Q3 [1]. This continuous growth in demand presents both opportunities and challenges for investors looking to expand and develop within this sector. Furthermore, industrial real estate plays a crucial role in driving the nation’s economic development.

The demand for industrial real estate in Vietnam

Industrial real estate is experiencing increasing demand in Vietnam.

Roles of Industrial Real Estate

The role of industrial real estate extends beyond merely supporting production and business activities. It significantly contributes to the nation’s economic growth in the following ways:

  • Supporting Production and Business Activities

Industrial real estate facilitates smooth production, processing, and packaging activities, ensuring the maintenance of supply chains, boosting labor productivity, and promoting interactions among various stakeholders.

  • Attracting Foreign Investment

Vietnam’s robust infrastructure development, stable political environment, competitive labor costs, and favorable tax incentives make industrial real estate an attractive choice for foreign investors.

  • Creating Jobs and Improving Living Standards

The development of industrial real estate generates employment opportunities across a spectrum of roles, from production workers to managerial positions, engineers, and support staff. This reduces unemployment and contributes to the overall economic development.

  • Developing Infrastructure

The growth of industrial real estate necessitates the parallel development of urban zones and related services such as transportation, commerce, healthcare, and education to support industrial operations.

  • Boosting Supply Chain and Logistics Efficiency

Industrial zones, warehouses, and logistics hubs enhance production efficiency by reducing transportation and storage costs and streamlining inventory management.

  • Increasing Government Revenue

Industrial real estate contributes to state budgets through land taxes, property taxes, revenue taxes, and corporate income taxes from businesses operating within industrial zones.

  • Facilitating Global Market Connectivity

Industrial zones are typically located in areas with favorable geographic and transportation advantages, enabling seamless international cooperation and technology transfer. This helps businesses integrate into global supply chains efficiently.

Advantages and Disadvantages of Industrial Real Estate

Advantages

Rising Demand for Industrial Real Estate

The industrial sector’s rapid development has led to a significant increase in demand for industrial real estate.

Reports indicate that the occupancy rate of industrial parks in key markets in northern and southern Vietnam remains high, at 85%-90% for industrial land, ready-built factories, and warehouses. Additionally, industrial land transaction rates rose by 5.9% compared to the previous quarter and by 20% year-on-year in the first nine months of 2023 [2].

Increasing Industrial Land Rental Prices

As demand for industrial real estate grows, industrial land rental prices and property values also tend to rise, providing stable profit opportunities for investors.

Nguyen Hoai An, Senior Director of CBRE Hanoi, predicts that over the next three years, industrial land rental prices are expected to grow by 3-9% per year in the North and 3-7% per year in the South. Rental prices for ready-built factories and warehouses are also projected to increase slightly, by 1-4% annually [3].

Long-Term Stability

Industrial real estate investments often involve long-term lease contracts ranging from 10 to 15 years, ensuring a steady income stream for property owners and investors over an extended period.

Diverse Investment Opportunities

The sector offers a range of investment opportunities, such as developing industrial parks, warehouses, rental factories, and logistics solutions.

Disadvantages

High Capital Requirements

Industrial real estate investments require substantial and stable capital, presenting a barrier to entry for smaller investors.

Large Land Requirements

Effective industrial real estate operations demand large land areas, leading to higher initial costs and challenges in acquiring and developing land, especially in urban areas or locations near major transportation routes.

Long Payback Period

Investors must prepare for a long payback period, typically around 10 years, particularly for industrial parks that require time to achieve full occupancy and secure long-term leases.

Skilled Workforce Challenges

Vietnam’s skilled labor force is not yet uniformly stable nationwide, posing recruitment and training challenges, particularly for industries requiring specialized skills or expertise, such as automated production lines and machinery maintenance.

To address this, businesses need to invest in internal training programs and collaborate with educational institutions to develop a sustainable workforce capable of adapting to evolving industrial needs.

Environmental Impact

Industrial and construction activities within industrial parks can lead to air, water, and soil pollution if not managed and controlled effectively.

Key features of Industrial Real Estate

Strategic Locations

Industrial parks are typically located in areas with excellent transportation connectivity, such as proximity to highways, seaports, or international airports. These advantageous locations facilitate the transportation of goods and raw materials, reducing logistics costs and enabling easy partnerships with domestic and international businesses.

Comprehensive Infrastructure

Industrial parks are equipped with robust infrastructure, including electricity, water supply, waste treatment systems, telecommunications, and transportation networks, to support efficient production and business activities.

For instance, a lack of stable water supply can disrupt operations such as machinery cooling, chemical processing, and fire prevention. Therefore, well-developed infrastructure plays a critical role in ensuring smooth operations.

Long-Term Lease Terms

Lease durations typically range from 5 to 20 years, depending on contractual agreements. These long-term leases provide businesses with the confidence to invest and expand while mitigating risks associated with shorter-term agreements (e.g., 1-2 years).

Real estate development supports the creation of many job opportunities

Industrial real estate helps reduce unemployment

Sectors of Industrial Real Estate

Industrial real estate is categorized into various types to meet the diverse needs of production, storage, and transportation of goods. Below are the primary sectors:

1. Warehouses and Manufacturing Facilities

  • Purpose: For production, assembly, or processing of goods.
  • Feature: These properties feature spacious, high-ceilinged, open layouts equipped with systems such as ventilation, fire protection, and heavy-duty flooring to support industrial production. Additionally, they are integrated with essential infrastructure like electricity, water supply, and industrial waste management systems.

2. Storage Areas

  • Purpose: Designed to store raw materials, goods, or finished products before they are transported to distributors or end markets.
  • Characteristics: These facilities are large-scale and equipped with modern inventory management systems. They also feature controlled environmental conditions, such as temperature and humidity regulation, to preserve goods for extended periods.

3. Transportation and Distribution Infrastructure

  • Purpose: To support the transportation and distribution of goods and strengthen supply chain connectivity.
  • Characteristics: Typically located near major transportation arteries, seaports, or airports. These properties often include warehouses, container yards, and distribution centers to facilitate efficient logistics operations.

4. Technology Parks and High-Tech Zones

  • Purpose: To focus on the development of advanced technologies and research.
  • Characteristics: These areas are modernly planned and integrate office spaces, research centers, and employee housing. They are often equipped with comprehensive technological infrastructure to support innovation and high-tech industries.

5. Multi-Functional Commercial Real Estate

  • Purpose: Combines multiple functions, such as production, storage, and commercial services.
  • Characteristics: Designed with flexibility to meet diverse needs. These properties are often located near economic hubs or residential areas to maximize accessibility and functionality.
Types of industrial real estate

There are various types of industrial real estate, each with its own unique advantages.

Factors affecting Vietnam Industrial Real Estate Value in Vietnam

The value of industrial real estate in Vietnam is affected by several key factors, including infrastructure quality, geographical location, political and macroeconomic conditions, social factors, and the state of foreign direct investment (FDI).

1. Supply and Demand for Industrial Land

  • Industrial Land Demand: The growth of various industries, particularly those driven by FDI and domestic enterprises, generates a significant need for industrial land and facilities.
  • Industrial Land Supply: The government actively expands industrial land reserves to meet market demand. Land approvals and licensing for new industrial zones directly impact the value of industrial land.
  • From 2022 to 2025, the government aims to develop an additional 44,760 hectares of industrial land.

2. Infrastructure Quality

  • Transportation: Locations near major highways, expressways, or seaports tend to have higher value due to convenience and cost savings.
  • Utilities: Access to reliable water supply, drainage systems, electricity, telecommunications, and environmentally friendly amenities adds significant value to industrial properties.

3. Geographic and Locational Factors

  • Proximity to Economic Hubs: Industrial real estate located near major urban centers or high-demand production areas tends to command higher prices.
  • Geographic Features: Favorable terrain for construction, with low risk of flooding or natural disasters, enhances land value.

4. Political and Macroeconomic Conditions

  • Government Policies: Planning, zoning, and state incentives play a crucial role in shaping industrial real estate value.
  • GDP and Monetary Policies: Economic growth and financial stability influence capital flow into real estate.

5. Foreign Direct Investment (FDI)

Vietnam is a highly attractive destination for foreign investors, particularly in manufacturing and processing sectors. The continued inflow of FDI will further drive demand for industrial land, contributing to increased property values.

Potential for Industrial Real Estate Development in Vietnam

According to the Ministry of Planning and Investment, industrial zones account for 35–40% of total registered FDI, with this share steadily increasing in recent years. Rental rates for industrial land are expected to grow by 5–9% annually in northern Vietnam and 3–7% annually in the south [4].

  • Investment Overview:
    • Over 10,400 domestic projects and 11,200 FDI projects are currently operational in industrial zones, with total capital exceeding VND 2.54 quadrillion and USD 231 billion.
    • These zones employ approximately 4.15 million workers, primarily concentrated in the Southeast (41.3%) and the Red River Delta (30.3%).
  • Emerging Areas: New industrial zones in provinces such as Bac Ninh, Binh Duong, and Long An are gaining interest from foreign investors, particularly in manufacturing and logistics.

With its strategic geographic location, abundant workforce, and government support, Vietnam’s industrial real estate sector has immense growth potential. This field promises to remain a vital economic driver, attracting significant attention from domestic and international investors.

Leading Industrial Zones in Northern Vietnam

Northern Vietnam is a strategic economic area attracting numerous domestic and international enterprises due to the strong development of key industrial zones:

  • VSIP Bac Ninh Industrial Park:
    • Size: 700 hectares.
    • Features: A Vietnam-Singapore joint venture offering international standards, located near Hanoi, Hai Phong Port, and Noi Bai Airport.
  • Yen Binh Industrial Park, Thai Nguyen:
    • Size: 693 hectares.
    • Features: Prime location with excellent connectivity to major cities and transport networks.
  • Nam Dinh Vu Industrial Park, Hai Phong:
    • Size: 1,329 hectares.
    • Features: Close to major ports and airports, focusing on manufacturing and electronics.
  • Yen Phong II Industrial Park, Bac Ninh:
    • Size: 1,200 hectares.
    • Features: Attracts investors with modern infrastructure and proximity to airports and seaports.
  • Dong Van IV Industrial Park, Ha Nam:
    • Size: 600 hectares.
    • Features: Well-connected to the Hanoi-Ninh Binh expressway and other key transport routes.
  • Hoa Lac Hi-Tech Park, Hanoi:
    • Size: 1,586 hectares.
    • Features: A high-tech zone with numerous large-scale projects.
  • Phu Nghia Industrial Park, Hanoi:
    • Size: 670 hectares.
    • Features: Strategically located along National Highway 6A, providing links to neighboring provinces.
  • Que Vo Industrial Park, Bac Ninh:
    • Size: 1,770 hectares across three phases.
    • Features: Close to Hanoi and major economic centers.
  • Dai An Industrial Park, Hai Duong:
    • Size: 603 hectares.
    • Features: Located within the Hanoi-Hai Phong-Quang Ninh economic triangle, with diverse transport options.
  • Cong Hoa Industrial Park, Hai Duong:
    • Size: 700 hectares.
    • Features: Convenient trade access, located near rivers, seaports, and railways.

Leading Industrial Parks in Southern Vietnam

Southern Vietnam is home to numerous industrial parks attracting significant attention from both domestic and foreign investors:

  • Becamex Binh Phuoc Industrial Park
    • Size: 1,993 hectares.
    • Location: Chon Thanh District, Binh Phuoc Province.
    • Highlights: Strategically positioned as a gateway for trade with the Central Highlands and ASEAN.
  • Phuoc Dong Industrial Park
    • Size: 3,158 hectares.
    • Location: Go Dau and Trang Bang Districts, Tay Ninh Province.
    • Highlights: Close to Ho Chi Minh City and neighboring provinces.
  • Hiep Phuoc Industrial Park
    • Size: 1,686 hectares.
    • Location: Nha Be District, Ho Chi Minh City.
    • Highlights: Situated near the Soai Rap River, facilitating waterway transportation.
  • My Phuoc 3 Industrial Park
    • Size: 999.7 hectares.
    • Location: Ben Cat Town, Binh Duong Province, 45 km from Ho Chi Minh City.
  • Phu My 3 Industrial Park
    • Size: 999 hectares.
    • Location: Tan Thanh District, Ba Ria-Vung Tau Province.
    • Highlights: Just 2 km from Cai Mep-Thi Vai Port.
  • Ong Keo Industrial Park
    • Size: 856 hectares.
    • Location: Nhon Trach District, Dong Nai Province.
    • Highlights: Proximity to National Route 51 and Long Thanh International Airport.
  • Bau Bang Industrial Park
    • Size: 1,000 hectares.
    • Location: Bau Bang District, Binh Duong Province, over 60 km from Ho Chi Minh City.
  • Thanh Thanh Cong Industrial Park
    • Size: 1,020 hectares.
    • Location: Trang Bang District, Tay Ninh Province.
    • Highlights: Located near the Vam Co Dong River.
  • VSIP II (Vietnam-Singapore Industrial Park II)
    • Size: 2,045 hectares.
    • Location: Tan Uyen District, Binh Duong Province.
    • Highlights: Conveniently connected via National Route 13.
  • Nam Can Industrial Park
    • Size: 11,000 hectares.
    • Location: Nam Can District, Ca Mau Province.
    • Highlights: Positioned for trade within the Mekong Delta.
  • Ong Keo Industrial Park (Phuoc Khanh)
    • Size: 824 hectares.
    • Location: Phuoc Khanh Commune, Nhon Trach District, Dong Nai Province.
    • Highlights: Close to Ho Chi Minh City (15 km), Cat Lai Port (12 km), and Long Thanh International Airport (15 km); nearly 90% occupancy rate.
  • Nhon Trach III Industrial Park
    • Size: 697.5 hectares.
    • Location: Hiep Phuoc Town, Nhon Trach District, Dong Nai Province.
    • Highlights: Along National Route 51, 10 km from Long Thanh Airport; attracts industries such as electronics, machinery manufacturing, food, and pharmaceuticals.
Top industrial parks in Vietnam are attracting significant foreign investment

Industrial real estate is expected to dominate the market in the future.

Industrial Real Estate: A Promising Market for the Future

  • Tax Incentives:

Special tax incentives are issued to support industrial real estate development, including tax reductions or exemptions for businesses investing in industrial parks.

  • Land Use Planning and Management:

The government actively monitors socio-economic development to ensure suitable land use planning and flexible management to attract investments.

  • Investment Facilitation:

Authorities provide support in administrative procedures and information dissemination to ease the investment process. Tax incentives further enhance opportunities for businesses to develop industrial real estate.

  • Public Infrastructure Investment:
    Modern infrastructure and efficient transportation systems significantly support industrial real estate development, improving connectivity between industrial parks and major economic hubs.

KTG Industrial: Trusted Partner in Vietnam’s Industrial Real Estate

KTG Industrial provides reliable industrial real estate solutions in Vietnam

KTG Industrial’s team is always professional and enthusiastic

KTG Industrial, a joint venture between Khai Toan Group (Vietnam) and Boustead Projects (Singapore), is recognized as one of Vietnam’s premier industrial real estate providers.

KTG Industrial operates in key economic zones, such as Dong Nai, Bac Ninh. These strategic locations offer seamless access to seaports, airports, and major economic hubs, ensuring efficient logistics and transportation solutions for businesses.

KTG Industrial delivers a wide range of industrial property options tailored to meet diverse business needs:

  • Ready-built factory (RBF): High-quality facilities designed for immediate use.
  • Ready-built warehouse (RBW): State-of-the-art storage solutions.
  • Built-to-suit factory (BTS): Tailor-made factories and warehouses built to specific client requirements.

KTG Industrial distinguishes itself with a steadfast commitment to sustainable development, consistently delivering long-term value to clients and society. This commitment is reflected in its focus on:

  • Renewable Energy: Installation of solar power systems to promote clean energy use.
  • Eco-Friendly Wastewater Treatment: Advanced systems that minimize environmental impact.
  • International-Standard Facilities: Construction projects that adhere to global benchmarks for quality and sustainability.

Every project undertaken by KTG Industrial reflects the company’s dedication to protecting the environment and fostering community growth.

Since its establishment, KTG Industrial has prioritized people and social responsibility alongside its high-quality products. Through various charitable initiatives and community support programs, the company actively contributes to local development and welfare.

KTG Industrial is more than an industrial real estate provider. It serves as a strategic partner, accompanying businesses on their journey toward sustainable growth. With a professional and dedicated team, KTG Industrial ensures exceptional service and solutions tailored to the evolving needs of its clients.

KTG Industrial embodies a commitment to creating real value for society, the economy, and the environment—setting a benchmark for excellence in Vietnam’s industrial real estate sector.

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