With the significant growth of e-commerce in Vietnam, it is also essential to provide suitable locations for distribution and transshipment centers.
In the face of the strong development of e-commerce, the logistics industry in Vietnam has recently promoted the demand for industrial real estate, especially warehouse facilities, logistics centers, and logistics centers in Vietnam. This is Savills Vietnam's opinion on the demand for real estate for the e-commerce and logistics industry in Vietnam on November 28.
According to Savills' recently released Vietnam Industrial Real Estate Spotlight 2024 report, the total supply of ready-built factories in the country reached 15.1 million m2, up 31% compared to the previous year with strong new supply in key provinces; in which, the supply of ready-built factories and warehouses in the Southern region reached 10.6 million m2 (factories accounted for 49% and warehouses accounted for 51%). The occupancy rate of these segments reaches 80% with an average rental price of 4.4 USD/m2/month.
In the North, ready-built factories and warehouses reached 4.5 million m2, accounting for 30% of the national supply with an allocation rate of 61% of factories and 39% of warehouse assets. The overall occupancy rate reached 80% with an average rental price of 5% USD/m2/month.
Mr. John Campbell, Director of Industrial Services at Savills Vietnam, said that this positive performance also partly comes from the strong demand for logistics space.
In Vietnam, the logistics industry has great growth potential and is one of the fastest growing industries in the world. The main drivers come from the stable growth rate of the economy, increased trade activities, high-value production and an expanding middle class, contributing to the growth of the e-commerce industry.
To meet this huge demand, according to Mr. John Campbell, the most important step any government can take to facilitate logistics is to invest heavily in infrastructure and ensure projects are completed on time. Infrastructure is the backbone of logistics, ranging from customs clearance to multimodal transport, roads and airports.
"Another important factor is ensuring enough land for logistics and e-commerce. Some industrial parks in Vietnam are only designated for production, which can pose a challenge for logistics and e-commerce companies to find suitable land. To solve this problem, it is important to have industrial parks that are flexible enough to meet both production and logistics activities," Mr. John emphasized.
In theory, investors can apply for a change of land use purpose, but this process can take several months and vary depending on the locality. However, such processes can be a hindrance for investors who need to make quick decisions.
Mr. John Campbell analyzed that many industrial parks planned in the period of 2007-2008 were mainly for production activities. Perhaps at that time we paid less attention to logistics and e-commerce. However, the rapid growth of these sectors has highlighted the need for more diverse land use in industrial parks.
In the long term, Savills Vietnam's experts believe that the planning for the development of new industrial parks should dedicate enough area for logistics and warehousing. In addition, with the significant growth of e-commerce in Vietnam, it is also essential to provide suitable locations for distribution and transshipment centers.
"With a population of more than 100 million people, Vietnam owns a large and rich online shopping market. More than 80% of the population uses Tnternet for shopping, fueling the increase in e-commerce activity. To meet this growth, the demand for land for the development of logistics facilities is increasing. Being limited in terms of suitable premises can lead to an increase in the cost of renting warehouses for businesses, affecting the competitiveness of the market," said Mr. John Campbell.
According to market research firm Mordor Intelligence, Vietnam's transportation and logistics market is expected to reach $48.6 billion by 2024, with a compound annual growth rate (CAGR) of 6.8%, reaching $71.9 billion by 2030. Vietnam's logistics performance index also increased to 3.3 points in 2023 thanks to the development of the logistics and export industries.
Citing a source from the Ministry of Industry and Trade, Savills Vietnam said that Vietnam's e-commerce sector has grown by 25% in 2023, becoming the fastest-growing market in Southeast Asia and one of the 10 fastest-growing markets in the world. More than 80% of internet users in the country said they use online shopping, thereby promoting the expansion of e-commerce and attracting small and medium-sized enterprises (SMEs) to enter the sector.
Currently, Shopee is an e-commerce platform that dominates in terms of sales market share. Tiktok Shop is also a fast-growing competitor, which underscores the social network's shift from advertising to commercial. New forms of sales such as livestreaming, shoppertainment and communication commerce are driving the social media commerce revolution.
According to the e-Conomy SEA 2024 report by Google, Temasek and Bain & Company, Vietnam's e-commerce market is estimated to reach $22 billion in 2024, ranking third in Southeast Asia after Indonesia at $65 billion and Thailand at $26 billion.
The market has grown by 18% compared to 2023, the third-fastest growth rate after the Philippines at 23% and Thailand at 19%. Vietnam's market is expected to maintain this growth rate, averaging more than 19% annually and reaching $63 billion by 2030. At that time, it was expected to surpass Thailand, ranking second in the region, behind only Indonesia.
E-commerce accounts for more than 60% of Vietnam's digital economy this year, becoming one of the two main growth drivers along with online tourism. Retail e-commerce platforms, including Shopee, TikTok Shop, Lazada, Tiki, and Sendo, have recently been joined by cross-border giants such as Shein, Temu... expand market options./.
