Vietnam’s Industrial Real Estate Booms: Savills Report Signals ‘Move Upmarket’
Hanoi & Ho Chi Minh City – Urgent breaking news reveals a significant shift in Vietnam’s industrial real estate landscape. Savills Vietnam’s newly released “Industrial Real Estate Focus” publication points to a surge in foreign direct investment (FDI) and a move towards higher-value manufacturing, positioning the country as a key player in global supply chains. This isn’t just about cheaper land anymore; it’s about quality, scale, and sustainability.
Savills Vietnam recently launched its annual “Industrial Real Estate Focus” publication in Hanoi and Ho Chi Minh City.
The Rise of Vietnam as a Manufacturing Hub
For years, Vietnam has been touted as an alternative to China for manufacturers seeking lower labor costs. But Savills’ report, unveiled at launch events attended by nearly 200 industry stakeholders, demonstrates a more nuanced picture. Director of Industrial Real Estate at Savills Vietnam, John Campbell, highlighted that while labor costs remain competitive – averaging around $350 per month in 2025, significantly less than China ($0.112/kWh electricity vs. $0.076/kWh in Vietnam) – the real draw is now Vietnam’s ability to accommodate increasingly sophisticated production needs.
“The Vietnamese industrial real estate market is entering a new phase of development, where growth is no longer based solely on the expansion of surface areas, but also on the quality of projects, the scale of investments and higher added value,” Campbell stated. This transformation is fueled by strategic infrastructure development and a growing emphasis on legal compliance and sustainable practices.
Key Trends Driving FDI and Growth
The report identifies three primary drivers of FDI flows: strategic infrastructure, high-quality FDI, and increasingly stringent requirements for legal frameworks, compliance, and sustainable development. The electronics sector is leading the charge, with export values soaring 140% between 2019 and the first ten months of 2025. However, the nature of investment is also changing.
While ready-built factories (RBFs) still account for 62% of new projects, a substantial 68% of total invested capital is flowing into land rental operations. This indicates a trend towards large industrialists establishing long-term, large-scale production bases – a clear signal of confidence in Vietnam’s long-term potential. This is a departure from the ‘quick win’ investments of the past.
Regional Performance: North vs. South
Both the North and South of Vietnam are experiencing robust growth. In the North, industrial zone land occupancy reached 86% in the second half of 2025, with average lease prices at $141/m². Ready-to-use factories command an average rent of $5.1/m² per month. The South is even more competitive, boasting a 90% occupancy rate for industrial land at $191/m² and a remarkable 92% occupancy for ready-made factories at $4.4/m² per month.
Crucially, infrastructure projects like the completion of Ring Road 3 and the Biên Hoà – Vung Tàu highway by 2026 are set to dramatically improve connectivity, particularly in the South. The Long Thanh International Airport, with a phase 1 capacity of 25 million passengers and 1.2 million tonnes of freight annually, is expected to be a game-changer, establishing a new international gateway.
Beyond Electronics: Data Centers and Semiconductors on the Horizon
Vietnam isn’t just focusing on established industries. The report highlights emerging opportunities in data centers and semiconductors, with the semiconductor sector projected to reach a $16.5 billion market size by 2030. This growth will require a significant investment in human capital, with a goal of training 50,000 engineers in key technology areas.
Legal consultancies InCorp and Freshfields, who also presented at the launch events, emphasized the growing importance of ESG criteria, legal transparency, and sustainable development. These factors are no longer ‘nice-to-haves’ but are becoming decisive factors for investors.
As Campbell succinctly put it, “Beyond cost advantages, factors such as infrastructure connectivity, a clear legal framework and the ability to meet global standards play an increasingly decisive role in attracting and retaining high-quality FDI.” Vietnam is actively working to provide all three.
Vietnam’s industrial real estate market is undergoing a profound transformation, evolving from a low-cost manufacturing destination to a sophisticated hub for high-value industries. This shift presents significant opportunities for investors and businesses alike, but success will depend on adapting to the new demands of a rapidly changing global landscape. Stay tuned to archyde.com for continued coverage of this dynamic market and expert insights into navigating the evolving opportunities in Southeast Asia’s fastest-growing economies.
The event in Ho Chi Minh City drew a large crowd of investors and industry professionals.