• The Northern region is currently leading the country in attracting FDI, particularly in high-value sectors such as automotive, electronics, and solar energy.   

• With its favourable geographical location, developed infrastructure, abundant land resources, and competitive rental prices, Northern Viet Nam’s industrial real estate is highly attractive, particularly in provinces like Bac Ninh and Hai Phong.  

Northern Region Leads in FDI Attraction

Viet Nam is projected to be one of the fastest-growing emerging markets, with an expected annual GDP growth of 6.2% by 2035. This growth is driven by consistent policies and the maximisation of trade potential. In the first nine months of 2024, Viet Nam attracted US$24.8 billion in committed foreign direct investment (FDI), with 2,492 new projects registered, accounting for a total investment capital of US$13.6 billion.   

Bac Ninh leads with 18% of total FDI, equivalent to US$4.5 billion, followed by Ho Chi Minh City at 8% and Quang Ninh at 7%. The Foreign Investment Agency (FIA) under the Ministry of Planning and Investment forecasts that Viet Nam will attract between US$39 billion and US$40 billion in FDI by the end of 2024.  

In terms of sectors attracting FDI, manufacturing and processing represent 63% of the total capital, reaching US$15.6 billion, a 10% increase compared to the same period last year. The newly registered capital totals to US$9 billion, reflecting a 4% increase year-on-year (YoY). Notable, the Northern region holds the largest share of new FDI registered in manufacturing, with 59% or US$5.3 billion. The Southern region follows with 38% or US$3.4 billion.

Thomas Rooney, Senior Manager of the Industrial Real Estate Department at Savills Ha Noi, highlighted the strengths of the Northern market in the manufacturing sector. He commented, “While the Southern provinces primarily attract industrial real estate tenants from processing industries such as rubber, plastics, food and beverages, the Northern region has become a hub for high value-added industries. These include automotive, machinery, electronics, and solar energy production. With the goal of positioning Viet Nam as a high-tech manufacturing hub, the North is seen as having greater potential and is expected to become an attractive destination for investors in the coming time.”  

According to Savills report, the manufacturing sector accounts for 48% of newly registered FDI in the Northern region, primarily focusing on high-value industries such as automotive and electronics, while real estate comprises 41%. Notably, the North attracts seven out of ten leading semiconductor companies. Bac Ninh stands out with the presence of four major players in this field: Samsung Electronics, Amkor Technology, Hanmi Semiconductor, and Victory Giang.  

During the 2022-2023 period, solar energy production projects in the Northern Economic Zones (NEZ) had impressive growth and are expected to maintain this strong momentum into 2024. Among the top five investment projects in this sector in 9/M 2024, the most notable was Trina Solar Cell's investment of US$454 million in a solar module and battery facility in Thai Nguyen. Additionally, the North attracted four other projects, featuring significant investments from major companies including Sunergy Wafer, VDL International B.V., Linton Crystal, and Silver Paste PTE."   

As of Q1/2024, Viet Nam hosts 33 data centres with a total capacity of approximately 80 MW, primarily concentrated in Ha Noi and Ho Chi Minh City, which together account for 94% of the supply. Domestic telecom providers such as Viettel, IDC, and VNPT are leading the sector, with Viettel holding a dominant market share. This dominance was further solidified by the inauguration of the largest data centre in the country, located in Hoa Lac (Ha Noi) in April. This facility spans 21,000 sq m, houses 60,000 servers, has a power capacity of 30 MW, and offers 2,400 racks, making it the largest data centre investment in Viet Nam.

Significant Land Availability with Competitive Rental Rates

The Northern region's success in attracting high-value manufacturing industries can be attributed to several key factors, as noted by the Senior Manager of the Industrial Real Estate Department: He highlighted that “the primary distinction between the Northern and Southern markets lies in their industrial focus and infrastructure advantages”. Key economic zones in the North, such as Bac Ninh and Hai Phong, are strategically located near China and the wider North Asian market, offering significant advantages to manufacturing-oriented industries.  

The Northern region accounts for approximately 61% of Viet Nam's total highway network, including the country's longest and most modern highway, the Lao Cai – Quang Ninh route, which spans approximately 600 km. The port systems in Hai Phong, Quang Ninh, Thai Binh, and Nam Dinh, along with Noi Bai and Cat Bi International Airports, enhance the region’s connectivity. Numerous regional highways linking industrial zones to Ha Noi and the Chinese border further increase the North’s attractiveness to foreign investors.   

Key upcoming projects include the 113 km Ring Road 4, which will connect Ha Noi, Hung Yen, Bac Ninh, and Vinh Phuc, and the 34 km Hoa Binh – Moc Chau expressway, which will link the Northern midland and mountainous areas to the Red River Delta and Central region.  

In addition, the Northern provinces benefit from an abundant land supply and competitive rental rates. In the first half of 2024, the NEZ offered 12,985 ha of industrial land across 73 industrial parks, reflecting a 12% YoY increase due to the expansion of industrial parks in Hai Phong, Hung Yen, and Hai Duong.  

According to Savills experts, industrial land rental prices in the North are 28% lower than those in the South. The Northern provinces have an average occupancy rate of 78%, with an average land rental price of US$132/m²/one-off term. Bac Ninh has the largest land supply in the NEZ, with a rental rate of US$148/m²/one-off term, 12% higher than the regional average. Bac Ninh also leads in the supply of ready-built factories and warehouses in the North, accounting for 40% of the market share in the region. However, even with these rates, they remain lower than the South’s average of US$183/m²/one-off term.  

For Viet Nam’s industrial real estate sector to maintain its attractiveness and ensure robust growth in the future, several key areas require attention. Firstly, infrastructure and transportation systems must continue to be developed and planned in a synchronised and efficient manner. Secondly, as Viet Nam aims to enhance value-added production across industries, which necessitates reforms in education and training to improve workforce skills. Despite having a large labour pool, particularly in the Northern region, the majority of workers remain low-skilled. This underscores the urgent need for upskilling to meet the demands of a more advanced manufacturing sector.  

Simultaneously, developers and investors need to align with industry trends, particularly the growing emphasis on sustainability. The development of green industrial parks is gaining significant attention, as transitioning to, and establishing such parks provides notable advantages for factories and warehouses compared to traditional models. Green projects not only meet businesses’ sustainability goals but also foster a positive environment for growth and work.  .    

Following this trend, Thomas noted: “Currently, most industrial park projects are still developed using traditional models. Transforming a conventional industrial park into an eco-friendly one is complex due to high costs, time requirements, and the need for careful government review of regulatory frameworks. To ease the initial financial burden of these transitions, it is crucial to implement incentive policies and provide credit support for investors.”