Numerous Advantages Attracting Investment in Industrial Real Estate
Vietnam’s industrial real estate market is witnessing robust growth. The exchange rate between the VND and USD remains stable compared to other countries in the region, coupled with corporate income tax incentives, giving Vietnam an edge over competitors such as Malaysia and Indonesia.
Data from the Asian Development Bank in 2024 shows that Vietnam’s workforce has a median age of over 32, indicating future growth potential. At the same time, the wages of manufacturing workers in Vietnam are lower than in most other Southeast Asian countries, except for Indonesia. This favors Vietnam in attracting foreign investors, especially businesses seeking low-cost production locations to optimize profits.
|
Free trade agreements (FTAs) play a significant role in attracting FDI to Vietnam. According to a report from the Ministry of Planning and Investment, recent years’ total registered foreign direct investment (FDI) in Vietnam shows that the manufacturing and processing sector accounts for over 70% of total FDI, reflecting investors’ priority in this field.
Thomas Rooney, Senior Manager, Industrial Real Estate Division, Savills Hanoi, commented, “The focus of FDI on the manufacturing and processing sector brings not only direct economic benefits but also creates a spillover effect, promoting the development of ancillary industries and related services.”
Major technology corporations such as Samsung, LG, Intel, and Foxconn have played a crucial role in establishing Vietnam as a regional electronics manufacturing hub. Recently, Foxconn’s total investment in Vietnam has been raised to $1.5 billion with a project in Bac Giang for phone assembly and manufacturing. This also demonstrates the trend of investing in high-value-added industries in the northern region.
Vietnam is strategically located for manufacturing development. “Vietnam’s geographical location in the heart of the Asia-Pacific region makes it an ideal destination for import and export activities,” analyzed Thomas Rooney. “There is also a significant shift of manufacturing from China to Vietnam, not only from Chinese enterprises but also from long-established American and European businesses in China looking to diversify or withdraw entirely.”
Northern Vietnam: The Shining Star of Industrial Real Estate
The northern region, including key provinces such as Bac Ninh, Hai Phong, and Thai Nguyen, is becoming the top destination for FDI projects in the manufacturing sector. Bac Ninh, with its proximity to Hanoi and developed infrastructure, has attracted large-scale projects from multinational corporations.
In the south, Binh Duong has also emerged as an important industrial center, with the participation of many FDI enterprises in manufacturing and processing. However, the north surpasses in terms of the number and scale of new projects due to advantages in cost, transportation infrastructure…
 Inter-provincial expressway system in the North. |
Northern Vietnam boasts a significant advantage in industrial land prices, with an average of approximately $138 per square meter, 20% lower than in the south. Specifically, in the south, strategic locations in Tier 1 areas such as Binh Duong or Ho Chi Minh City can fetch prices up to $300 per square meter. In contrast, the northern market averages only $180 per square meter for Tier 1 areas like Bac Ninh.
The infrastructure in the north is assessed as robust, with 10 completed expressways and four projects under development. In the meantime, the south has about seven expressways.
“In Vietnam, road transport is still the primary mode of transportation, so smooth travel from production areas to consumer markets helps businesses optimize logistics costs. Especially, the expressways connecting industrial parks with Hanoi and the Chinese border further enhance the north’s appeal to foreign investors,” said Pham Thi Thu Trang, Senior Manager, Industrial Business Development at Core5 – Indochina Kajima.
Compared to the south, the north has more economic zones as per the government’s planning, notably the new coastal economic zone in Hai Phong, spanning over 20,000 hectares. The north also attracts investment due to its competitive labor force.
While Vietnam’s industrial real estate market holds great potential, one of the main challenges remains the shortage of skilled labor.
“This is particularly important as Vietnam aims to increase value-added in manufacturing. Although labor is abundant, especially in the north, most of it is low-skilled. To address this issue, education and training reforms are necessary to enhance workers’ skills,” said Thomas.
In addition, Thomas emphasized that infrastructure development is crucial to enhancing Vietnam’s competitiveness. Currently, infrastructure projects are mainly concentrated in a few areas, but there is a need for expansion and synchronized development nationwide.
In particular, improving the transportation network connecting industrial parks and consumer markets will help optimize logistics costs and facilitate businesses.
Duy Minh
Sun Urban City: Filling the Luxury Gap in Southern Hanoi
With its modern design, seamless infrastructure, and world-class amenities, Sun Urban City is poised to become the premier living space for the people of Ha Nam and new residents from across Northern Vietnam.
The Tech Giants’ New Hub: Bac Ninh, Hai Phong, and Thai Nguyen
The North is thriving with its advanced transportation infrastructure and competitive industrial land prices, making it the frontrunner in attracting FDI projects, particularly from major technology corporations.
“Why Partnering with a Vietnamese Bank is a Strategic Decision for International Businesses”
The influx of foreign direct investment into Vietnam has opened up a world of opportunities for the country’s economy, and domestic banks are uniquely positioned to ride this wave. With an innate understanding of the local market dynamics, culture, and people, these banks are equipped to offer unparalleled support and tailored solutions to foreign enterprises looking to establish or expand their presence in Vietnam. This deep-rooted knowledge enables them to facilitate the growth and development of these enterprises, fostering a mutually beneficial relationship between the two economies.
The Mega Water Reservoir Project: Unveiling Vietnam’s Majestic Hydraulic Engineering Marvel
Lake Canh Tang, nestled in Lac Son District of Hoa Binh Province, is an awe-inspiring feat of northern Vietnam’s grand irrigation engineering. With a water surface area spanning 2.5 times that of Hanoi’s iconic West Lake and a staggering tenfold capacity, this reservoir is an engineering marvel that leaves a lasting impression.
