Opportunities for Vietnam Industrial Real Estate After Merging Provinces and Cities

The policy of merging provinces and cities and streamlining the administrative apparatus not only optimizes resources and management efficiency but also opens opportunities for Vietnam’s industrial real estate market. When administrative boundaries are adjusted, large-scale economic zones will form, creating stronger competitiveness in attracting Foreign Direct

Investment (FDI), developing infrastructure, and expanding industrial land funds.

1. Merging Provinces and Cities: A Strategic Step for Regional Economic Development

In the context of deep integration, the merger of provinces and cities is expected to:

• Create new growth poles: Forming large-scale inter-provincial economic models, similar to the “metropolitan region” models in many countries.
• Enhance competitiveness: Merged localities can mobilize concentrated resources and avoid scattered investment.
• Optimize infrastructure: Concentrating public investment on key projects such as highways, seaports, airports, and digital infrastructure. For example, Ho Chi Minh City, after merging with Binh Duong and Ba Ria – Vung Tau, is predicted to become the largest economic hub in the country and a leader in FDI attraction due to its modern airport-logistics advantages.

2. Opportunities to Expand Industrial Land

Merging administrative boundaries brings benefits regarding land for industrial development:

• Expansion plans: Merged localities can allocate larger land funds, meeting the needs of multinational corporations.
• Reducing industrial land scarcity: Previously, highly developed areas like Bac Ninh or Binh Duong often lacked land for lease; after merging, supply will be more abundant.
• Conditions for specialized IPs: It allows for the formation of specialized industrial parks such as automotive support, semiconductors, and smart logistics. According to the Ministry of Planning and Investment, by mid-2025, there are over 420 industrial parks in the national plan, but the realized plan only accounts for about 60%. Merging helps re-allocate and expand, increasing the feasibility of land exploitation.

3. Attracting FDI Through Scale and Infrastructure Advantages

FDI into Vietnam’s industrial real estate is at record highs due to global supply chain shifts. When provinces and cities merge:

• Larger economic scale: This increases attractiveness to international investors who seek concentrated markets capable of providing full services from production to logistics.
• Synchronized inter-regional infrastructure: If accompanied by investment in ring roads, highways, seaports, and airports, industrial parks will not be limited by administrative boundaries.
• Optimized operating costs: Businesses can access labor, raw materials, and logistics services from neighboring areas at lower costs. For example, the Southeast region after the merger will become a “manufacturing-logistics hub” of Southeast Asia, competing directly with Thailand and Malaysia in attracting FDI.
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4. Impact on Industrial Land Rental Prices

Industrial land rental prices have been rising quickly in recent years. According to Savills Vietnam, in 2025:

The North: Average rental price is 135 – 145 USD/m²/lease cycle.

The South: Average rental price is 180 – 200 USD/m²/lease cycle (the highest in the country).

Central Vietnam: 50 – 70 USD/m²/lease cycle, with much room for growth. When cities merge, the expansion of industrial land supply is expected to reduce the pressure of rising rental prices and create fair competition between regions. However, IPs near strategic infrastructure (seaports, airports, highways) will still maintain high prices due to high demand.

5. Opportunities to Form Large-Scale Industrial-Urban Complexes

A prominent market trend is the emergence of integrated industrial-urban-service complexes. Merging facilitates the development of these models through:

• Synchronized planning: Combining IPs with urban areas, worker housing, logistics centers, and services.
• Sustainable development: Ensuring a balance between industrial production and social infrastructure.
• Improving quality of life for laborers: Thereby increasing the IP’s attractiveness to investors and workers. Many experts believe this will be the inevitable direction for Vietnam’s industrial real estate in the next decade.

6. Challenges in the Initial Stage

Besides the prospects, merging provinces also creates certain challenges:

• Overlapping regulations: Investment, environmental, and construction regulations between provinces need to be unified.
• Changes in management: Businesses may face difficulties working with new management agencies.
• Labor force transition: Workers may need to adjust residency and administrative registration, which may incur social costs. However, in the long term, synchronized policies and processes will create a more transparent and stable investment environment.

7. International Integration and the Role of Vietnam Industrial Real Estate

As Vietnam participates in many Free Trade Agreements (FTAs) like EVFTA, CPTPP, and RCEP, industrial real estate will benefit directly:

• Increased exports: IPs near seaports and airports will strongly support international supply chains.
• Welcoming production shifts: Many corporations are moving from China, and Vietnam is a top choice due to its strategic location and competitive costs.
• Green investment – ESG: The combination of new infrastructure and sustainable policies helps improve Vietnam’s image on the global industrial map.

Conclusion

Merging provinces and cities is not just an administrative reform but also an important push for Vietnam’s industrial real estate market. The expansion of land, the formation of large economic zones, FDI attraction, and inter-regional infrastructure development will create a foundation for a new growth phase.

In the short term, businesses may experience some procedural and human resource issues. But in the long term, this is a golden time for domestic and foreign investors to seize opportunities, especially as Vietnam integrates deeper into the global supply chain. Vietnam’s industrial real estate is therefore predicted to remain the most attractive segment and serve as a “support point” for regional economic development and national competitiveness.

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