Vietnam Logistics: Still Undervalued or Already Priced In?

 

 Vietnam Logistics: Still Undervalued or Already Priced In?

• Core question: Is the “industrial boom” already fully priced?
• Angle: cap rates vs growth

Infrastructure Spending

After the Doi Moi reform in 1986, Vietnam opened its doors to foreign direct investment (FDI), setting the scene for one of the fastest-growing economies in South Asia. 

For most, if not all, economies, rapid economic growth comes with a stronger logistics and transportation industry, all of which could only be made possible with adequate infrastructure. 

Vietnam is currently in a state of optimal population. With the projection from the Ministry of Health, the Vietnamese population will start to decline after the early 2050s, prompting the Communist Party of Vietnam (CPV) to accelerate growth by easing credit and increasing infrastructure spending disbursement in order to get Vietnam to the High-Income Country (HIC) status before the population declines.

In 2025, infrastructure spending was increased to 7%, alongside a near 20% credit growth, which helped Vietnam to achieve the 8% GDP growth target. Needless to say, this highly benefits the logistics industry and real estate in particular. Between 2026 and 2030, Vietnam plans to launch the North-South high-speed railway project valued at around USD 67 billion, the Lao Cai–Hanoi–Hai Phong railway (USD 8 billion), and several major infrastructure ventures such as the international transshipment ports of Can Gio, Lien Chieu, and Hon Khoai, along with Gia Binh Airport, and expansions of Phu Quoc, Chu Lai, and Ca Mau airports.

The government has announced that total social investment capital is expected to reach 33.2% of GDP in 2025, with a target of 40% in 2026. Long Thanh International Airport is nearly complete. Tan Son Nhat Terminal 3, Noi Bai Terminal 2, Cat Bi, and Phu Bai are being expanded. Metro lines in Hanoi and Ho Chi Minh City – such as Cat Linh-Ha Dong, Nhon-Hanoi Station, and Ben Thanh-Suoi Tien – are also being activated.

'China +1' Strategy

In the early 2000s, Japanese companies like Canon, Sony, and Toyota were highly dependent on Chinese manufacturing, and this country became a major part of their supply chain. However, by the mid-2000s, political tension broke out between China and Japan, leading them to form a supply chain strategy known as 'China +1' to diversify their production line. 

 As China grows as an industrial powerhouse and with the increasing geopolitical tension between different countries, especially the USA and China, MNCs globally adapt their strategy to find alternatives to China to diversify their operational risk from China in case of any conflict. Furthermore, manufacturing wages in China have steadily risen, making it a more expensive proposition.

These factors combine to make Vietnam the perfect location for MNCs to look at in investing into. According to various economic reports, the average manufacturing wage in Vietnam is considerably lower than in coastal Chinese provinces. Moreover, Vietnam’s more compact geography, access to the East Sea, and strategic infrastructure development often present Vietnam with sourcing advantages. 

Adding to this, Vietnam also has its hand on favorable trade agreements: Vietnam’s active participation in numerous free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), provides preferential access to key international markets and reduces tariff barriers. 

Moving forward, the Ministry of Finance projects that by 2026, the first free trade zones will be launched in Da Nang, Hai Phong, and Ho Chi Minh City. By 2030, Vietnam could have 6–8 zones or similar models in strategically advantageous provinces. By 2045, the goal is to establish 8–10 internationally competitive free trade zones contributing 15–20% of national GDP.

Altogether, from the global firm's interest in reducing geopolitical risk, the acceleration of the Vietnamese economy through strong economic growth paved the way for strong growth in the logistics real estate market.

Data Analysis: Ho Chi Minh City

Data from CBRE shows that in 2025, the ready-built warehouse (RBW) market reached a significant milestone, setting a new absorption record of over 466,000 sqm (a 16% increase over 2024). This is the highest level recorded in the past five years, equivalent to 18% of the total existing supply, driven primarily by the E-commerce and logistics sectors. 

Notably, growth momentum in the second half of the year was further fueled by a strong influx of F&B and lifestyle chains from China. This trend directly boosted demand for warehouse space from third-party logistics (3PL) providers to support the expansion of these retail brands across the Southern market.

Driven by positively improved occupancy rates, rental prices continued their upward trend. The average asking rent for warehouses reached USD 5.0/sqm/month (up 6.3%), while factory rents reached USD 5.2/sqm/month (up 3.7%) compared to 2024. Better infrastructure drove the average asking price in the South to USD 183/m² (+4.4% vs 2024).

Ready-Built-Warehouses (RBW)/Ready-Build-Factories (RBF) segment recorded a record-breaking year, with ready-built warehouse absorption hitting a five-year high (>466,000 m²), driven by e-commerce and logistics. Strong demand pushed warehouse monthly rents to USD 5.0/m² (+6.3%) and factory rents to USD 5.2/m² (+3.7%).

In Hanoi, despite there being slight changes in growth, the theme still remains. Vietnam’s industrial real estate market experienced significant fluctuations in 2025, driven by global geopolitical dynamics and domestic reforms. While industrial land absorption slowed, ready-built facilities continued to perform well, supported by solid demand from both logistics and manufacturing companies.

RBW and factory RBF segments experienced a record-high level of new supply in 2025, with nearly 1.2 million sqm completed, of which ready-built factories accounted for more than 60% of the total new supply, and a net absorption of both segments totaled 0.8 million sqm in 2025, up 4.3% year-on-year.

On the demand side, electronics manufacturers remained the dominant tenant group in the North. Additionally, logistics companies and sports equipment manufacturers also recorded large leasing transactions during the year.

In 2026, the supply of industrial real estate products is expected to remain elevated, as a series of new projects launched in the second half of 2025 are scheduled for completion and handover during 2026–2027

These developments are anticipated to facilitate the expansion of the industrial real estate market into new potential areas, particularly around the Gia Bình Airport area in Bac Ninh and the southern part of Hai Phong—home to newly developed industrial parks within the Southern Coastal Economic Zone as well as the city’s new free trade zone.

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