Northern Industrial Park Land Rents Continue to Rise Sharply

Vietnam’s industrial real estate market in the first half of 2025 witnessed active developments. Notably, Northern industrial land rents continued to rise, occupancy rates remained high, and new supply increasingly attracted the interest of FDI corporations. This trend reflects the Northern region’s sustainable appeal as a new regional industrial hub.

1. Northern Industrial Market Records Positive Absorption

According to a report by CBRE Vietnam, in the first half of 2025, industrial land absorption in Tier 1 Northern markets reached nearly 260 hectares, raising the occupancy rate to 80.4% by the end of Q2 2025. This is an increase of 1.9 percentage points compared to the same period in 2024, showing that land rental demand remains stable despite a volatile global economic context.

Additionally, the Northern market welcomed two new industrial parks, providing approximately 340 hectares of leasable land. This not only increases supply but also creates more choices for investors, especially in electronics manufacturing, sports equipment, and logistics.

2. Industrial Land Rents Reach Record Highs

A notable highlight in Q2 2025 was that the average industrial land rent in the North reached 139 USD/m²/remaining term. Compared to the same period last year, this price increased by 3.8% and is considered the highest level to date.

Meanwhile, the ready-built factory and warehouse market also remained hot:

• Ready-built warehouses: Average rent of 4.7 USD/m²/month.
• Ready-built factories: Average rent of 4.9 USD/m²/month.

Although the occupancy rate for the warehouse and factory segment decreased slightly by 1 percentage point compared to the previous quarter (down to 82.7%), rental prices still increased by 1.8% year-on-year, reflecting sustainable demand from international tenants.

3. Reasons for the Rise in Northern Industrial Park Rents

Several factors are driving the increase in industrial land prices in the North:
First, strong FDI flows into manufacturing and logistics Statistics from the General Statistics Office show:

• Newly registered FDI in Q2 2025 reached 21.52 billion USD, up 32.6% compared to the same period in 2024. Realized FDI in the first half of the year reached 11.72 billion USD, the highest in the past five years.
• Notably, many large-scale factory lease transactions came from electronics and sports equipment manufacturers, while logistics continued to lead warehouse demand.

Second, the North has become a new industrial hub Localities such as Phu Tho, Bac Ninh, Hung Yen, Hai Phong, and Quang Ninh are increasingly confirming their status as Northern industrial centers due to:

• Strategic location near Hanoi and seaports.
• Synchronized infrastructure directly connected to highways, ring roads, and railways.
• Strong incentive policies from local governments.

Third, administrative reform and provincial mergers The policy of merging provinces and cities and streamlining the apparatus is opening new opportunities for the industrial market:
Simplifying licensing procedures.

• Expanding land funds for industrial park and economic zone development.
• Creating conditions for forming future free trade zones.

4. Industrial Real Estate Rental Trends: Flexibility and Sustainability

According to Mr. Thomas Rooney, Associate Director of Industrial Real Estate Services at Savills Vietnam:

• Current tenants prioritize flexibility, cost-savings, and sustainability.
• ESG criteria and green energy are ngày càng becoming important “filters” in rental decisions.
• International businesses want more flexible lease agreements, smart infrastructure, and integrated clean energy.

This means that industrial park developers in the North need to proactively transform, focusing on smart industrial park models, green factories, and integrated logistics systems to maintain their appeal.

5. Opportunities and Challenges for Investors

Opportunities:

• Continuing rent increases will help industrial park developers achieve higher profit margins.
• Stable demand from FDI creates momentum to maintain occupancy rates.
  The global supply chain shift trend provides an opportunity for Vietnam to become a new industrial center.
• Challenges:
• Supply remains limited outside core industrial areas such as Phu Tho, Bac Ninh, and Hai Phong.
• The cost of developing green industrial parks is high, while incentive mechanisms are not yet attractive enough.

Supporting infrastructure is not uniform across localities, affecting supply chain operational efficiency.

6. Outlook for the Second Half of 2025

Experts believe that in the second half of 2025, the Northern industrial park market will remain active due to:

• The wave of FDI into high-tech sectors (semiconductors, electronics, clean energy).
• Inter-regional transport infrastructure such as the Noi Bai – Lao Cai highway, Hanoi Ring Road 4, and Lach Huyen Port Phase 2.
• Synchronized administrative reforms that shorten licensing times, creating conditions for new industrial park projects.
• It is predicted that Northern industrial land rents may continue to increase by 3–5% in 2025, especially in areas surrounding Hanoi, Bac Ninh, and Hai Phong.

With strong demand from the FDI sector, administrative reform policies, and connectivity infrastructure advantages, Northern industrial park rents are and will continue to maintain a growth trend in 2025. This is both an opportunity for developers to increase profits and a challenge that requires a transition toward green, flexible, and sustainable models to maintain appeal to international tenants.

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