Real Estate Companies Show Ambitious Plans to Enter the Industrial Property Market

Recently, many real estate companies have clearly shown their ambitions to enter the industrial property market. Even some companies that previously specialized in residential development are adjusting their strategies to participate in this booming sector.

Steady Annual Rent Increases

“My biggest mistake was only focusing on urban areas and neglecting industrial zones, losing a significant source of revenue.” This was stated by Nguyen Thien Tuan, Chairman of DIC Corp, at the 2024 annual shareholders' meeting.

The industrial real estate sector is thriving thanks to the fourth wave of foreign direct investment (FDI). The Binh Duong Industrial Zones Authority (BDIZA) reported that in the first five months of this year, industrial zones in the province attracted $525 million in FDI, up 75% year-on-year, reaching nearly 44% of the annual plan.

Recently, many new “super industrial zones” have appeared on the market, notably the Phu Quy Industrial Zone. This is a new project approved by the Thanh Hoa Provincial People's Committee, with a total area of 540 hectares, making it the third largest industrial zone in Thanh Hoa province.

According to the Vietnam Association of Realtors (VARS), industrial real estate is one of the fastest-growing segments and always maintains its “star” position in the Vietnamese real estate market. This is evidenced by the occupancy rate of ongoing projects, which is estimated to be over 75%, with the northern key provinces reaching 82% and the southern key provinces reaching 92%.

“Strong demand and an upward trend have caused industrial land rents to continuously rise, with stable annual increases of 8-12%. The northern region saw the highest price increases, with average industrial land rents at $135/m2/lease cycle. In the southern region, the average rent is $188/m2/lease cycle,” VARS reported.

Agreeing with this, CBRE also predicts that industrial real estate will continue to develop in the future. It is expected that in the next three years, industrial land rents will increase by 3-9% in the north and 3-7% in the south.

Companies Continuously Enter the Market

Given the above potential, many companies are reevaluating the industrial real estate market.

For example, DIG disclosed that they are considering developing four industrial zones, including Chau Duc II (Ba Ria - Vung Tau Province), Pham Van Hai (Ho Chi Minh City), Hang Gon (Dong Nai Province), and Long Son (Ba Ria - Vung Tau Province).

DIC’s leadership has shown a clear determination to develop eco-industrial zones. Nguyen Thien Tuan stated that many investors are willing to pay up to $500/m2 in rent but cannot find projects because the land has already been leased out. If existing industrial zones are upgraded to eco-industrial zones, rental prices could increase by 1.5 or even double.

In addition, many units that previously specialized in residential projects are now expanding into the industrial real estate segment, notably Nha Khang Dien. At the 2024 annual shareholders' meeting, Chairman Mai Tran Thanh Trang stated that the Le Minh Xuan Industrial Zone (expansion) project has completed the legal phase 1 and is expected to generate revenue from 2025.

Another company showing clear ambitions to “cross over” is BCG Land. The company aims to find partners to enter the industrial real estate market by 2028, in addition to its existing real estate sectors.

However, not “resting on their laurels,” VARS experts have noted the limitations of this segment. Key economic areas such as Ho Chi Minh City, Binh Duong, and Dong Nai face many difficulties in expanding industrial land due to rapid urbanization and high land competition.

“Additionally, policies and administrative procedures are complex, consuming a lot of time and cost, making it difficult for investors. Policies related to industrial zone investment and development are sometimes inconsistent and change abruptly, making long-term planning difficult for investors,” VARS experts frankly stated.