According to CBRE research, the demand for the warehouse market continues to be backed by improvements in manufacturing and consumer spending, and logistics rents are expected to increase in the next few years.
According to the General Statistics Office of Vietnam, in January 2018, manufacturing production increased by 23.8% year-on-year. The most notable improvements were recorded in tobacco (21%), textiles (23%), apparel (25%), and especially in the manufacturing of computers, electronics, and optical products (38%).
There have been several large-scale developments in these fields in recent years from global brand names such as Samsung, Foxconn, and LG.
In 2017, Vinfast, a local automobile manufacturer, is planning to open a car production line in Hai Phong city and to launch their first model in 2020. This key project will attract vendors and suppliers to Hai Phong city which will increase the demand for warehouse space.
Consumer spending is growing and is forecast to continue to increase over the next few years, especially in e-commerce. Several large internet retailers from China have entered the Vietnamese market, including Alibaba, JD.com, and Tencent. The expansion of modern retail outlets from giant international corporations such as Lotte and AEON, as well as the rise in the number of convenience stores are key drivers for warehouse demand.
According to CBRE enquiries, 3PLs (third-party logistics), retail, and manufacturing are drivers of the warehouse market. The preferred locations are Ho Chi Minh City, Binh Duong, Hanoi, Bac Ninh, and Dong Nai.
CBRE forecasts that the 4.0 Industrial Revolution also affects the warehouse market. More quality supply will come to the market in the next three years in the northern and the southern areas. In the regional market, automated storage and logistics robots are recommended in prime logistics space with flat layout, stable power supply, and excellent internet connectivity to increase competitiveness.
Due to its strategic locations closer to regional logistics hubs, such as Hong Kong, the southern region has long been the leading cluster in the Vietnamese industrial sector. In the southern area, rental rate will increase by 4 per cent in 2018 and 3.5 per cent in 2019 and 2020.
The southern area is expected to achieve higher rental growth thanks to strong demand from retailers, 3PLs, and manufacturers, as well as suppliers who come to the market from Gemadept, Saigon Newport, and Saigon Depot. However, the southern area is also expected to have a higher vacancy rate of 20 per cent in 2018 and 2020.