According to Cushman & Wakefield, Vietnam has become one of the most potential e-commerce markets in the ASEAN region. The Southeast Asia e-commerce report 2020 by Google, Temasek, and Bain & Company shows that the average growth rate during the 2020 – 2025 period is 29% and by 2025, the scale of Vietnam’s e-commerce will reach 52 billion USD.
Vietnamese consumers increasingly prefer the convenience of online shopping, which is driving the trend of shifting goods storage from retail stores to warehousing spaces. The strong development of e-commerce is reshaping the logistics market and creating more diverse types of assets, with the most prominent being urban logistics real estate.
Urban logistics real estate is receiving a lot of attention from investors. Although the terms are different, this new sector is often confused with the logistics city model. While the logistics city can be understood as a city model closely associated with the development of logistics services, with logistics services as the core economic sector. Typically, a logistics city will be closely linked to an important infrastructure serving logistics services, such as international seaports and airports. In contrast, urban logistics focuses on the city as the core, primarily serving consumer needs in cities.
The trend of demography shows an increase in last-mile delivery in urban areas. This is particularly true in Vietnam, where nearly 40 million people live in cities. However, the cost of urban delivery is also increasing, accounting for 50% or more of the total supply chain costs. Therefore, e-commerce investors are eager to have access to suburban real estate within a 30-minute drive. This is also a top priority for developers to increase their competitive advantage.
According to Cushman & Wakefield, currently, due to high land costs and opposition from stakeholders to post-city operations, urban logistics projects are mainly located in central or suburban areas. According to the data from this entity in Q4 2023, the key economic region in the South recorded a total supply of warehouses of about 5.5 million square meters, of which Ho Chi Minh City accounted for about 14% of the total supply. The key economic region in the North recorded a supply of about 2.2 million square meters of warehouses, of which Hanoi accounted for 12% and Hai Phong accounted for 26% of the total supply.
The logistics system is the foundation for warehousing services, also known as order fulfillment services, which include two parts: order processing and delivery to the buyer’s hands. Typically, to serve the needs of cities, logistics areas are divided into three regions calculated from the central core.
The demand for urban warehousing real estate for retail often has a rectangular shape, with an area ranging from 3,000 m2 to 7,000 m2, with 5 loading docks for vans, elevated floors for truck access, a 6m-high ceiling, and spacious parking areas. On the other hand, real estate for 3PL companies and parcels requires narrow plots, with an area ranging from 5,000 m2 to 7,000 m2, with 5 doors for vans, multiple side doors for trucks parked outside, and doors for trucks waiting inside, with a ceiling height of 6m.
In the context of limited land and a growing population, by 2050, Ho Chi Minh City’s urban area will have 28 – 30 million people, with an urbanization rate of about 90%. Higher urban density means greater obstacles in utilizing post-city land. Currently, there is a significant gap between the necessary urban post-space and the actual quantity. Narrowing this gap requires time and financial investment to resolve barriers to post-service use in cities. Local authorities and investors need to develop a strategy for the “urban space model”.
According to Cushman & Wakefield, in the coming years, a possible future scenario is underground warehouses being built, and trucks being converted to electric trucks, which will address the objections of stakeholders because trucks are the cause of noise and air pollution.
The urban post-system is the foundation for the city’s development. To maintain competitiveness, attractiveness, and environmental friendliness, cities need to participate in solutions to reduce the costs and difficulties of urban post. Focus on investing in developing passenger transportation infrastructure, logistics infrastructure, increasing cargo handling capacity, port storage capacity, and investing in advance supply chains to form region-sized logistics service centers. At the same time, gradually restructure the market share, prioritize the development of railway, inland waterway, and aviation transportation to reduce the pressure on road transport.
