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Vietnam Industrial Market Update The Rise Of Coastal Industrial Zones

Hanoi – Novemver 19, 2020


By Q3/2020, the total land  for the industrial development of 5 main industrial cities and provinces in the North includes Hanoi, Bac Ninh, Hung Yen, Hai Duong, and Hai Phong accounted for 13,800 ha in which 9,600 ha of leasable industrial land. The average occupancy rate of the industrial park remained at a positive level of 79%. Industrial zones in Hanoi, Hai Duong, and Bac Ninh have average occupancy rates of about 90%. For the Southern market, the total industrial land area is double that of the Northern market, reaching about 38,000ha, of which 24,000ha of leasable industrial land including Ho Chi Minh, Binh Duong, Long An, Dong Nai, Ba Ria-Vung Tau with an average occupancy rate of nearly 77%. CBRE noted that the supply of industrial land ready to hand over in industrial zones in both regions was scarce.



Vietnam has been learning lessons for more than 30 years of industrial development in the coastal provinces of neighboring countries such as China and Thailand. The main industries that are prioritized to attract investment in these two countries must be mentioned as raw chemicals, pharmaceuticals, machinery, automotive accessories, and electronics. In addition, economic zones and industrial zones located near the sea always have great investment demands and maintain superior rates and occupancy rates. Vietnam's coastal regions are starting to see a similar trend, receiving as much investment as demand from both domestic firms expanding production and multinational corporations.


Consequently, the coastal provinces of Vietnam have been taking advantage of the available potentials to develop the industries. Compared to other provinces in the Northern region, Hai Phong and Quang Ninh have more supply allocated for industrial development.


Hai Phong is one of the biggest industrial hubs in Vietnam with significant projects such as DEEP C II and III and Vinhomes' new industrial zones. As of Q3 2020, the City recorded an average occupancy of 56% providing a recent launch of big Industrial Parks. Quang Ninh recently emerges as an industrial coastal province. The Province is expected to provide a large amount of industrial land bank in the future, with two economic zones (EZs) of Quang Yen and Van Don, of which Quang Yen coastal EZ is oriented to become a growth engine promoting investment for Quang Ninh. DEEP C, one of the major industrial park developers, is developing an industrial complex associated with a seaport in Quang Yen EZ to exploit geographical advantages and utilize the navigation channel to Lach Huyen deep-sea port.


To attract investors, Quang Ninh prioritizes the development of the processing and manufacturing industries. Secondary investors will have the highest corporate tax incentives in economic zones and - receive short-term vocational training costs for employees in the first 2 years from the date of issuance of Investment Certificate. For industrial park infrastructure investors, the lowest rate of land rent in 5 years will be applied and will be supported 30% in advance of compensation costs, site clearance, 30% support investment level of the wastewater treatment system in industrial zones (maximum VND30 billion) after completion of construction. Quang Ninh province is also focusing on infrastructure development such as urgently completing the Van Don - Mong Cai expressway: reducing the time to go to the Chinese border gate from 2 hours to 50 minutes, expected to be completed in 2021. Highways connecting Hanoi, Hai Phong, Quang Ninh, and major seaports and international airports have all been put into operation.




The COVID-19 pandemic and trade tensions have disrupted global supply chains, Vietnam is one of the attractive destinations for investors of companies with production lines in China. However, this trend is being interrupted by the US Presidential election, the Biden administration is expected to have drastic changes in economic policy, such as reducing tensions with China and re-joining the CPTPP.  According to discussions with a number of companies interested in moving to Vietnam, investors are waiting to determine US policy under the new presidency to take appropriate steps.


The growth of e-commerce and logistics companies since the start of COVID-19 has created a huge demand for storage space and distribution networks. Therefore, the need to find land to develop logistics facilities dominates the market. Since the end of 2018, the market has welcomed many foreign investors in logistics warehouse development such as BW Industrial, LogisValley, LOGOS, and GLP entering the market. Mapletree - one of the pioneering investors in building rental warehouses from Singapore - is also aggressively expanding its land bank. By 2021, the market is expected to receive about 800,000 sqm of warehouse supply for rent, mainly in the areas of Bac Ninh, Hai Duong, Hai Phong, and Quang Ninh.




Electronics and supporting industries/automobile manufacturing are considered key sectors in attracting investment. CBRE acknowledges the entry of many large tenants in the electronics sector, including smartphone makers in an industrial park in Bac Ninh (100ha) and Universal Scientific Industrial at DEEP C Hai Phong I industrial zone, Wistron in Ha Nam. Such as Thailand, Vietnam are considered a bright spot in attracting automotive supporting industries. CBRE also highlight a large number of inquiries and deals for land purchase and factory lease contracts from the US, South Korea, Germany, and Japan from the automotive/supporting industries.




© 2016, CBRE, Group Inc. CBRE Limited confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.