Foreign investors dominate warehouse segment

A publication released earlier in June by FiinGroup said that Vietnam’s modern warehousing industry is witnessing strong expansion by foreign investors. Warehousing remains the most attractive segment in Vietnam’s logistics industry thanks to strong commercial, manufacturing, and retail activities, it said.

There are dozens of warehousing-related projects planned over the next few years, Photo: Shutterstock

Hai Khieu, director and head of Market Research and Consulting Division at FiinGroup, said that modern warehouse supply in Vietnam has seen strong growth with a compound annual growth rate for 2020-2023 of 23 per cent.

“Both local and foreign investors are now aggressively developing logistics infrastructures, especially modern warehouses in Vietnam, to incentivitise from the rising demand of manufacturing giants, modern trade retail chains, and logistics companies as well as solid trade activities,” Khieu said.

The modern warehouse market in Vietnam has recorded active participation of both local and foreign investors with mega facilities. The most active players include Mapletree, SLP, JD Property, Gemadept, and Transimex.

Figures from FiinGroup depicted that Mapletree, a real estate development, investment, and management company headquartered in Singapore, and BW Industrial Development, a joint venture between Warburg Pincus and Becamex IDC, are leading the development in Vietnam’s modern warehousing industry. They and SLP, an industrial and logistics infrastructure developer, account for 46 per cent of the total area.

Mapletree has been expanding its warehouse portfolio aggressively in Vietnam with mega logistic hubs in Bac Ninh, Hung Yen, and Binh Duong provinces, with each of these hubs containing 12-24 warehouses.

BW Industrial is operating over nine million square metres of industrial land in prime locations under control across 50 projects in 12 provinces in Vietnam, focusing on developing for-rent modern warehouses and light industrial to capture the outsized growth opportunities of manufacturing, increasing domestic consumption, and the rapid growth of e-commerce.

Fion Ng, COO of BW, told the online Mingtiandi 2024 APAC Logistics Forum on June 18 that the demand for factory rentals is sustainable, which bodes well for future logistics growth.

“We leased a record high last year with 500,000sq.m of new factory space alone, excluding renewals. Additionally, our leasing space for the first five months of this year is 30 per cent higher compared to the same period last year,” said Ng.

As of Q4 2023, BW Industrial has secured equity commitments of more than $1 billion from its investors and partners and has formed strategic partnerships with global manufacturers as well as e-commerce and logistics players for one of the fastest-growing markets in Asia.

Meanwhile, since its establishment in 2020, SLP has an investment portfolio of nine modern logistics facilities comprising nearly one million sq.m. It also has an additional 920,000sq.m gross floor area in the pipeline, focusing on Hanoi and Ho Chi Minh City.

Elsewhere, domestic investors include ICD ST, NPL Logistics, and Gemadept are utilising the ecosystem of seaports, shipping, and logistics to provide comprehensive services to customers.

FiinGroup recorded 25 upcoming projects for the 2024-2027 period, with an additional net leasable area of around 1.9 million sq.m. With the recovery of the economy and increasing demand for high-quality storage solutions, Khieu of FiinGroup forecasts that Vietnam’s warehousing sector will continue to entice significant investment.

“Key focus areas will include expanding cold storage capacity, enhancing technological infrastructure, and ensuring compliance with international standards,” Khieu said.

According to FiinGroup, logistics, industrial, and retail are the top end-use customer segments, supported by the growth of e-commerce trend and restructuring of global supply chains.

Key growth drivers would be the national master plans aimed at expanding industrial park land to allure investments from regions such as Long An, Dong Nai, Bac Giang, and others, as well as rapid e-commerce growth.

“These components encompass transportation, inventory management, cold storage, and warehouse management,” Khieu added.

Factory and warehouse project set to draw foreign investors to Bac Ninh Industrial property developer KCN Vietnam Group JSC (KCN Vietnam) broke ground on a factory and warehouse project in Thuan Thanh III Industrial Park on April 17 in the northern province of Bac Ninh.

Foreign developers account for three-quarters of Vietnam's warehousing Foreign developers dominate the modern warehouse market in Vietnam, accounting for over 75 per cent of the market share by net leasable area (NLA) in 2023.