HO CHI MINH CITY — Vietnam has been hailed as an ideal location for industrial real estate investment due to its economic and demographic factors, with analysts predicting it will become a regional leader in the sector.

In a recent report titled “From Vision to Action: Accelerating Green Transformation in Vietnam’s Industrial Sector”, JLL Vietnam highlighted Vietnam’s industrial market dynamics, favourable demographics and ongoing green initiatives as drivers for the sector’s sustainable transformation.

The company said it is strategically located to benefit from the “China + 1” strategy, with foreign direct investment in the country growing at a compound annual rate of 10% between 2010 and 2023, much higher than the ASEAN average of 7.6%.

Vietnam is moving towards a carbon-neutral economy by pledging to achieve net-zero carbon emissions by 2050. These initiatives include increasing the use of renewable energy, improving energy efficiency and promoting electric transportation. The industrial sector is leading in green building certification, with more than 70% of projects to be LEED-certified in 2023.

To accelerate this transition, Vietnam has introduced Decree No. 35/2022/ND-CP, which focuses on green initiatives, of which eco-industrial parks are a key aspect. Projects such as Amata City and Deep C Industrial Zone in Bien Hoa have made great strides in implementing the eco-industrial park model, emphasizing energy efficiency, waste recycling, and the use of renewable energy.

Trang Lê, head of research and consultancy at JLL Vietnam, said: “The Vietnamese industrial market is at a critical juncture, where embracing sustainability is not only a regulatory compliance issue but also a strategic advantage.

“We are very confident that all stakeholders seeking to drive sustainable change and seize opportunities in Vietnam’s industrial landscape will also see the business case for green initiatives.” Vietnam has a large number of highly educated workers, 87% of whom have higher education, which is also an important factor in attracting investment in logistics and industrial development, the report said.

Despite economic headwinds, the ready-made factory market remains strong, driven by manufacturing growth and foreign investment. After a period of rapid growth, the ready-made warehouse industry is currently stabilizing, supported by storage needs from domestic consumption and manufacturing.

With the rapid growth of the industrial and logistics markets, the market has also begun to pay attention to new alternative assets such as data centers and cold storage. Savills Vietnam also stated that with its superior geographical location, preferential tax policies and competitive production costs, Vietnam is becoming an attractive destination for foreign investors in the industrial real estate sector.

It said that Vietnam has many advantages in attracting industrial real estate investment. The industrial real estate market in Vietnam is experiencing strong growth. The stable exchange rate between the Vietnamese dong and the US dollar compared with other currencies in the region, as well as the preferential corporate income tax policy, have created more favorable conditions for Vietnam than competitors such as Malaysia and Indonesia.

Free trade agreements play an important role in attracting foreign direct investment to Vietnam. Since joining the World Trade Organization in 1995, Vietnam has signed a series of trade agreements, among which the Vietnam-EU Free Trade Agreement (EVFTA) signed in 2019 has triggered a surge in foreign investment.

Large technology groups such as Samsung, LG, Intel and Foxconn have played an important role in Vietnam’s emergence as a regional electronics manufacturing hub.

In summary, Vietnam is becoming an ideal choice for industrial real estate investment with its superior geographical location, economic growth potential and continued green transformation. For companies that want to build factories or start businesses in Vietnam, there are many opportunities here. Vietnam’s preferential policies, stable exchange rates and high-quality labor force provide investors with highly competitive conditions.

If you have the need to build a factory or start a business in Vietnam, please feel free to contact Jaycy. We will wholeheartedly provide you with professional consultation and support to help you succeed in the Vietnamese market.