Vietnam’s industrial real estate market faces a crucial strategic turning point, prompting a mandatory shift in the competitive mindset of developers.

Industry observers in the nation, seen as a new manufacturing hub in Southeast Asia, now urge a transition away from reliance on cost incentives towards a strategy focused on quality, value-added services and long-term sustainability.

The cost-based race, says David Jackson, CEO of real estate consultancy Avison Young Vietnam, has concluded. The introduction of the new land price bracket in 2026 and the phasing out of corporate income tax incentives are set to “change the rules of the game”.

“Instead, the focus must be on building trust and consolidating international cooperation capacity through the quality of supply, value-added services and enhancing professionalism and transparency,” Jackson points out, adding that for stable, sustainable development, the key is to “maintain an optimistic outlook but take strategic action”.

Developers pivot to green, integrated logistics

Financial pressures and sustainable growth mandates are compelling manufacturers to prioritize efficiency, flexibility and speed to mitigate cost risks and optimize operations.

Beyond basic factors like location and rent, notes Vu Minh Chi, director of industrial park services at Ho Chi Minh City-based Avison Young Vietnam, investors are increasingly demanding comprehensive legal support, customs procedures and certificates of origin. The objective is to facilitate the rapid operational launch of projects and strengthen production capacity to meet multi-market export standards.

This specialized demand drives the market’s evolution from volume to quality. Ready-built industrial formats – factories, warehouses and specialized logistics real estate like cold storage and last-mile centres – continue to see robust leasing demand. From what Avison Young has observed, the real estate consultancy says that logistics services in Vietnam are becoming highly professionalized, offering end-to-end services from import, export and inspection to packaging and customs clearance.

In response, developers are shifting away from basic infrastructure investment towards providing specialized consulting services and developing advanced models, including green industrial parks, integrated logistics and environmental, social and governance-compliant projects.

This strategic shift is also impacting land values. Plots in a series of proposed free trade zones nationwide, near deep-water ports or airports within a short travel radius of between one and two hours are top priorities, according to Avison Young.

This trend is forecast to push rental prices in strategic areas, particularly the manufacturing province of Dong Nai bordering Ho Chi Minh City, past the US$200 per square metre, lease-term threshold. This increase is largely tied to the anticipated opening of the multi-billion-dollar Long Thanh International Airport in 2026, which is expected to boost the economic outlook for the entire Greater Ho Chi Minh City region.

Major infrastructure and energy projects, such as the airport and the nearby Nhon Trach 3 and 4 liquefied natural gas ( LNG ) power plants – Vietnam’s first LNG-to-power facilities – are all expected to begin operations in 2026, which will materially impact Dong Nai and the whole region. To compare, industrial land rent in the province currently averages US$195 to US$200 per square metre.

Growth prospects clouded by productivity, energy gaps

Vietnam continues to be a bright spot in the global supply chain, underpinned by a stable foreign direct investment pipeline – especially in manufacturing and processing – which contributed to export turnover reaching US$391 billion in the first 10 months, an increase of 16.2% year on year.

The country benefits from 16 free trade agreements, covering 87% of the world economy, according to data provided by Avison Young. Bloomberg Economics’ Export Potential Index ranks Vietnam ahead of Indonesia, Malaysia and Thailand on labour costs and investment environment, with its manufacturing capacity and energy profile assessed as comparable to China.

However, limitations persist, Avison Young shares, constraining export added value. In 2023, labour productivity was notably low, reaching only one-tenth of Singapore’s and half of China’s, hindering high-value production. Furthermore, logistics costs are high, accounting for 16.8% to 17% of GDP, significantly above regional peers. The country’s Logistics Performance Index of only 3.3 points, ranking 43rd globally, is 0.4 points lower than China’s, indicating lower logistical efficiency.

Finally, a high input dependency – with the automotive industry importing 80% of components and the electronics sector maintaining a localization rate of only 5% to 10% – reduces the manufacturing sector's autonomy.

For Vietnam to keep advancing in the global value chain, Avison Young’s research recommends four critical areas for improvement: enhancing human resource quality, accelerating inter-regional infrastructure investment via public-private partnership models, increasing self-sufficiency in raw material supply and ensuring energy security.

The firm specifically urges the country to resolve legal roadblocks to accelerate the implementation of LNG power projects to secure energy supply.

LNG is seen as a crucial bridge fuel to support Vietnam’s transition away from coal and maintain the supply stability required for a competitive industrial economy. Resolving the current legal and contractual bottlenecks, particularly for the Nhon Trach 3 and 4 power plants, is paramount to achieving the capacity goals outlined in the nation’s revised Power Development Plan VIII.