Despite the strong outbreak of COVID-19 in 2020 in Vietnam, many new industrial zones were established, and key industrial projects also began construction. Especially in 2021, a series of large M&A projects were witnessed, driving the development of the industrial real estate supply.
Vietnam: A Destination in the New Investment Wave
According to the Vietnam General Statistics Office, the index of industrial production in the first 11 months of 2021 is estimated to increase by 3.6% compared to the same period last year. At the same time, over 26 billion USD of FDI capital has been poured into Vietnam in the past 11 months, an increase of 0.1% compared to the same period last year. With a stable political environment, inflation, and exchange rates, Vietnam has continuously engaged in diplomacy, signing major trade agreements such as EVFTA, CPTPP, etc., in recent years, expanding international markets, and achieving impressive growth in import and export despite the pandemic. Along with the wave of disinvestment from China, Vietnam has become a promising destination, offering golden opportunities for Vietnamese businesses to thrive, expand production, and reach new heights.
With such macroeconomic context, the demand for industrial real estate has been continuously increasing, reflecting the need for expanding production or establishing new production facilities. As a manager, you need to equip yourself with basic knowledge of the current types of industrial real estate to choose the most strategic and suitable location for your business. Let's delve deeper into these types with Tan Thuan.
Types of Industrial Real Estate
Manufacturing Plants / Production Facilities
The most common type of industrial real estate is manufacturing plants or production facilities. This type varies in size, from large factories producing complete product lines to smaller factories mainly completing final products. Additionally, depending on the nature of the production process, such as labor-intensive or mechanized production processes, the technical specifications of the factories also vary according to demand.
There are two types of factories that managers need to consider:
- Ready-Built-Factories: The biggest advantage of this type of factory is flexibility and time. Ready-built factories are suitable for businesses: 1. Without special requirements; 2. Wanting to enter the market quickly and start operations as soon as possible; 3. Needing financial budget flexibility; 4. To consider the possibility of expanding production and business on a larger scale.
- Built-to-Suit-Factories: This type of factory is often larger in scale, designed to meet specific requirements of investors. When choosing this type, the construction process will take longer and require more commitments from both investors and suppliers regarding capital, time, and effort. In addition, the lease contract will usually last 10-15 years.
Built-to-suit buildings can be used for many specific business purposes
Distribution Warehouses
Distribution warehouses are where products are stored from manufacturers to distributors before being transported to retail points. Therefore, the location of distribution warehouses is the most important factor determining the efficiency of a business's supply chain. A good location should help the business optimize logistics costs and maximize service quality (delivery time, quality of delivery). Managers can learn more about the factors to determine warehouse location in the blog post below. HERE
Private Warehouses
Private warehouses are usually used for storage rather than distribution, such as cold storage for preserving product freshness. Private warehouses are often built near factories with smaller scales than distribution warehouses. For this type of warehouse, managers have comprehensive control but incur higher short-term costs.
A special note, according to research on industrial real estate trends in 2022, cold storage is one of the types with increasing demand.
Office Buildings (Office Buildings, R&D, Showrooms, Storage Buildings)
Office building in the Industrial Zone
These are flexible office products provided according to customer demand and market demand. These buildings can be used for some or all purposes such as office space, showrooms, R&D development centers,... Typically, these buildings have lower ceiling heights.
Data Centers
Used for companies in the high-tech industry, data centers need to have uninterrupted power supply, backup power generators, ventilation systems, and cooling. Therefore, these centers need to be built in places close to power lines and main power stations to support the operation of expanding servers. At the same time, these buildings need to focus strictly on security to prevent unauthorized access and information breaches. Data centers need high ceiling heights, space above the racks to accumulate heat, and a cold air blowing system to neutralize the temperature. In Vietnam, many data centers are located in industrial zones, such as FPT's or VNG's data centers located in Tan Thuan Export Processing Zone.
Tan Thuan Export Processing Zone - Diverse Industrial Real Estate Leasing Services
With more than 30 years of accompanying diverse industrial real estate services, Tan Thuan Export Processing Zone is an ideal destination with a central location, large land fund, superior services, comprehensive infrastructure investment, and reasonable fees to meet the needs of investors. Tan Thuan Export Processing Zone aims to become a high-tech zone in the center of Ho Chi Minh City, creating a high-value chain for partners in the export processing zone. Currently, we are focusing on expanding services:
- Office and office building leasing
- Building built-to-suit industrial products with diverse land funds suitable for investor needs
- Warehouse leasing
- Factory leasing
Contact us now for detailed advice.