Vietnam’s Industrial Real Estate: Overcoming Challenges, Riding the New Wave of FDI

Amid global geopolitical volatility, restructuring of supply chains, and the introduction of new international tax policies, Vietnam’s industrial real estate sector continues to leave a strong impression through remarkable recovery and growth. The continued inflow of foreign direct investment (FDI) has become a major catalyst for this segment, often dubbed the "golden goose" of Vietnam’s real estate market.

Impressive FDI Growth – A Leverage for Industrial Real Estate

As of mid-2025, total FDI into Vietnam reached over USD 18.4 billion, marking a 51.2% increase compared to the same period last year. Notably, a significant portion of this capital was directed toward real estate, primarily industrial real estate, which has maintained stable and robust growth.

Foreign investor interest in Vietnam is nothing new. However, the current wave of FDI demonstrates a notable shift towards high-tech industries, logistics hubs, cold storage facilities, and green factories. These trends are driving increased demand for land leasing and infrastructure development in industrial parks nationwide.

Key provinces such as Bac Ninh, Hai Phong, and Quang Ninh in the North, as well as Long An, Binh Duong, and Dong Nai in the South, remain attractive destinations for large-scale investment projects. Several global giants, including Foxconn, Pegatron, Samsung, Lego, and Amkor, have pledged billions of USD into Vietnam’s industrial parks, significantly boosting demand for infrastructure and land.

Challenges from Global Tax Regulations and Trade Policies

Despite the influx of capital, Vietnam’s industrial real estate sector is facing significant headwinds, particularly from new global tax frameworks and international trade regulations.

One of the most notable pressures stems from the implementation of the Global Minimum Tax (GMT) initiative led by the OECD. As countries begin enforcing a 15% minimum corporate tax on multinational corporations, many companies are reconsidering their global investment strategies and profitability models. This development may diminish the effectiveness of Vietnam’s traditional tax incentive policies used to attract FDI.

Additionally, the US–China trade tensions, along with trade defense measures from major markets such as the EU and India, are further complicating international trade flows and global supply chains. These disruptions could adversely impact land leasing and factory operations in Vietnamese industrial zones.

In response, the Vietnamese government is swiftly adjusting its policies. Several solutions have been proposed, including: implementing financial support mechanisms as alternatives to tax incentives, streamlining project approval processes, reforming administrative procedures, and accelerating investment in infrastructure and logistics connectivity to lower operational costs for investors.

Another pressing issue in the market is the limited availability of industrial land. In the first half of 2024, new lease contracts in many major industrial parks dropped 30–65% year-on-year, primarily due to the near-full occupancy of existing IPs, while the approval process for new parks remains slow and complex.

This scarcity has led to a surge in land rental prices, especially in high-growth areas. According to data from research firms, from 2020 to 2024: Northern IPs saw an average rental price increase of 35%, Southern IPs witnessed an even sharper rise of up to 67%.

Current occupancy rates are remarkably high, standing at around 83% in the North and 92% in the South. These figures indicate strong demand but also highlight a supply bottleneck, creating considerable pressure for new manufacturers planning to enter the Vietnamese market.

Emerging Trends Reshaping the Market

Under growing pressure from both demand and supply sides, Vietnam’s industrial real estate market is shifting toward specialization and flexibility. The following trends are becoming increasingly prominent:

1. Rise of Logistics and Cold Storage: The rapid growth of e-commerce, pharmaceuticals, and frozen food industries is driving significant demand for cold storage warehouses and modern distribution centers.

2. Ready-Built and Built-to-Suit Factories: These flexible factory models are gaining popularity for their quick deployment, reduced upfront risk, and customizable scale, especially among small and medium-sized enterprises (SMEs).

3. Eco-Industrial and Smart Parks: International investors are increasingly attracted to green industrial parks that offer digital infrastructure, energy efficiency, smart waste treatment, and environmental sustainability.

4. Digitization and ESG Compliance: From leasing to facility management, industrial real estate developers are investing heavily in technology and adhering to environmental, social, and governance (ESG) standards to meet the evolving expectations of foreign clients.

Government Support in Action

To address market bottlenecks, the Vietnamese government has introduced several key initiatives:

• Land Use Planning to 2030: The master plan includes 221 new industrial zones, along with expansion of 76 existing ones.

• Administrative and Investment Reform: This involves shortening licensing periods, decentralizing authority, and empowering local governments to better manage investment processes.

• Infrastructure Development: Major investments are being directed toward North–South expressways, ring roads, seaport systems, and regional logistics hubs to reduce operational costs for tenants and enhance cross-border connectivity.

Additionally, the Ministry of Planning and Investment is currently drafting new supportive policies aimed at retaining major FDI groups amid increasingly fierce regional competition.

Conclusion

Vietnam's industrial real estate sector is experiencing a strong boost from a new wave of FDI, particularly in high-tech and logistics industries. Despite facing challenges such as tariff pressures, limited land availability, and the need to improve labor productivity, the market holds long-term potential thanks to expansion planning, administrative reforms, and the development of high-quality green industrial models. Importantly, if policies are implemented consistently and effectively, industrial real estate will continue to be a bright spot for attracting international capital, making a significant contribution to Vietnam’s sustainable economic growth in 2025 and beyond.