Chance for domestic players to gain bigger slice of the logistics market

June 27, 2024 - 09:03
Domestic companies possess a comprehensive ecosystem including logistics, seaports and transportation systems.
Inside a warehouse of Mapletree in Việt Nam. — Photo

HÀ NỘI — Foreign developers are currently dominating the modern warehouse market in Việt Nam, accounting for over 75 per cent of the net leasable area market share. However, domestic players still have a chance to turn the tables.

Seizing market shares

In 2023, the supply size of the modern logistics industry in Việt Nam was close to 3.9 million square metres (sq.m) of floor space, with an annual growth rate reaching up to 23 per cent in 2020-23, according to the report 'Việt Nam logistics: The strong expansion of foreign investors' by FiinGroup.

Of this, 75 per cent of the leasing market share is held by foreign investors. The most active players in the market are foreign investors such as Mapletree, SLP, JD Property, Gemadept and Transimex.

Among them, the three big players, Mapletree, BW Industrial and SLP, have taken up to 46 per cent of the market share by area, contributing a total of nearly 1.79 million square metres of floor area, the report showed.

Currently, Mapletree is the leading giant with 922,000sq.m of floor area, nearly double that of its competitor BW Industrial. The Singaporean giant is actively expanding its scale in Việt Nam.

BW Industrial and NPL Logistics are considered rising stars in the country's modern warehouse market, with 22 new projects in 2020-2022. BW Industrial plans to open a 243,000sq.m facility in Đồng Nai Province in 2026.

Domestic industrial park developers are also entering the ready-built factory and warehouse segment.

KCN Vietnam Group JSC broke ground on a 14-hectare project in Bắc Ninh Province in early April, which will provide over 90,000 sq.m of leasable space. The project aims to attract investors in high-tech, clean tech, electronics, light industries, food processing and supporting industries.

It also plans to complete phase 2 of its ready-built factory and warehouse project at Phú An Thạnh Industrial Park in Long An Province, adding 45,000 sq.m of leasable space in the third quarters of 2024

Similarly, IDICO Corporation is implementing factory and warehouse projects at Nhơn Trạch I and Hựu Thạnh Industrial Parks, with the first phases completed and leased out. IDICO also plans to develop ready-built facilities at Phú Mỹ II and Cầu Nghìn Industrial Parks, aiming for one million sq.m of leasable space by 2026.

According to FiinGroup, domestic investors account for 25 per cent of Việt Nam's warehouse market.

Turning the tables

Although foreign investors are currently leading the market thanks to their advantages in finance and understanding of the logistics sector, the domestic players possess a comprehensive ecosystem, including logistics, seaports, and transportation systems.

The research showed that both domestic and foreign investors are actively developing logistics infrastructure, especially modern warehouses, to meet the increasing demands from manufacturers and modern retail chains.

FiinGroup estimates that 25 logistics projects will be implemented from now until 2027, with a total leasable area of 1.87 million sq.m, growing at an annual rate of 7 per cent during the period.

Warehouses and factories are being evaluated as an attractive segment in Việt Nam, driven by strong trading activities, manufacturing and retail.

Industrial real estate continues growing strongly as steady foreign investment flows into the country, especially from large global investors and major projects.

The key challenge is maintaining this advantage and capitalising on the opportunity to attract more stable investment, Trương Khắc Nguyên Minh, deputy general director of KCN Vietnam, told

Amid this influx of new investment, Minh is particularly interested in small and medium enterprises (SMEs) as an important customer group alongside large FDI firms. SMEs typically need support services more than expansive space.

Industrial real estate developers must offer flexible product solutions and support services to serve the SME segment. Pre-built factories and warehouses are one segment that can meet SME requirements.

CBRE Vietnam notes that as manufacturing and logistics grow, industrial products are becoming more diverse, including ready-built factories, warehouses, multi-story facilities, hybrid buildings, temperature-controlled spaces and custom-built options.

Tenants now have greater choices, beyond just the standard 50-year land leases.

To attract tenants, consulting firms advise industrial developers to offer value-added services and incentives, such as market entry support, human resources, legal, management and technical solutions - in addition to the physical real estate. — VNS