(BĐT) – The industrial land rental market in Southern Vietnam showed signs of slowing down in the first half of 2025. This is considered a warning signal, though not indicative of a recession.
Most major industrial land transactions in the South were concentrated in Q1 2025.
A Cooling Market After Years of Strong Growth
CBRE Vietnam’s recent report on the Southern industrial real estate market covers Ho Chi Minh City, Binh Duong, Dong Nai, Long An, and Ba Ria – Vung Tau. The slowdown reflects cautious investor sentiment, with many unwilling to take risks amid uncertainties around tariffs.
“Most major industrial land deals in the South took place in Q1/2025. Since April 9, 2025, when the U.S. announced tariffs on Vietnam, investors have largely paused to observe. The total absorbed industrial land area in H1/2025 was just 55 hectares—1.7 times lower than the quarterly average between Q1/2023 and Q1/2025,”
said Ms. Thanh Pham, Head of Research & Consulting at CBRE Vietnam.
In addition to tariffs, other factors have contributed to the decline—most notably, a shortage of clean land and prolonged legal processes. Many new industrial parks are still facing site clearance or waiting on land-use conversion approvals. The average approval time for investment projects is 12–24 months, delaying new developments by park operators.
While major expressways such as Bien Hoa – Vung Tau, HCMC Ring Road 3, and HCMC – Moc Bai are under construction, their progress is insufficient to meet logistics needs. Poor inter-provincial connectivity is driving up transport costs and dampening foreign direct investment (FDI) decisions.
Meanwhile, land rental prices in the South remain among the highest in the country (ranging from USD 180–300/m²/lease cycle), prompting investors to consider the North (e.g., Bac Giang, Hai Phong) or Central Vietnam (e.g., Nghe An, Quang Nam), where rental rates are lower and incentive policies are more attractive.
Experts note that while Vietnam remains a key link in the global supply chain, international businesses are becoming more cautious in light of geopolitical volatility, high interest rates, and weakening demand in major export markets (e.g., the U.S., EU). These factors reduce the motivation to expand factories in Vietnam, particularly in the South.
Reasonable Rental Pricing Alone Is No Longer Enough
According to CBRE Vietnam, occupancy rates in key industrial zones—such as those in HCMC, Binh Duong, Dong Nai, Long An, and Ba Ria – Vung Tau—are nearing saturation, with many surpassing 90%. Although average rental prices in the South rose 5–8% year-on-year in 2024, new transaction volumes have dropped sharply, especially in provinces bordering HCMC. In H1/2025, the average rental price reached USD 179/m²/remaining lease term, with an occupancy rate of 89%.
To revive the appeal of the Southern industrial land market, experts recommend first accelerating administrative reform—particularly shortening the approval timelines for investment, construction permits, and land-use conversions. Next, there should be a focus on developing specialized industrial parks with integrated infrastructure, logistics, worker housing, and support facilities (e.g., eco-industrial zones, high-tech industrial parks).
In parallel, there must be greater investment in regional transportation infrastructure to ensure timely completion of key corridors—especially Ring Road 3, the Bien Hoa – Vung Tau Expressway, and urban rail lines. Additionally, flexible incentive policies are needed to retain long-term FDI, such as rental discounts, free initial infrastructure use, and legal support.
Ms. Thanh Pham commented that as we enter the second half of 2025, adjustments to corporate income tax (CIT) incentives will pose significant challenges for industrial park developers. Even if direct government incentives decline, the pressure to maintain competitiveness and attract secondary investors remains high.
Therefore, according to Ms. Pham, relying solely on reasonable rental pricing will no longer suffice. Developers must adopt more comprehensive strategies to attract long-term tenants while continuously improving their products, services, and amenities to create differentiation in a shifting market.
Southern Industrial Land Market Still Holds Long-Term Potential
Despite the current slowdown, the long-term outlook for the Southern industrial real estate market remains positive. In H2/2025, as major transport projects break ground and new industrial parks (e.g., VSIP III – Binh Duong, Long Duc 3 – Dong Nai) ramp up investment attraction, the market is expected to recover.
Furthermore, ongoing efforts by Japanese, Korean, and American companies to restructure supply chains and diversify away from China will continue to be a major driver for Vietnam. In this context, Southern Vietnam remains a top destination due to its proximity to seaports, international airports, and its mature industrial ecosystem.
A representative from JLL Vietnam stated that the country currently has a golden opportunity to attract FDI inflows. However, new and creative policies are needed to retain investors—since current advantages won’t last forever. Investors are constantly comparing their options.
In conclusion, the Southern industrial real estate slowdown is a warning—not a recession. If the issues mentioned above are effectively addressed, the region can overcome the current stagnation and enter a new and more sustainable growth cycle by late 2025 or early 2026.
Source: – baodauthau.vn