Vietnam hits highest FDI inflow since 2009, fuels industrial real estate boom

DNHN - This robust inflow is not only transforming the country’s industrial landscape but also signaling Vietnam’s rising role in the global supply chain amid shifting geopolitical dynamics.

Vietnam’s industrial real estate market is entering a new growth phase, fueled by a record-breaking surge in foreign direct investment (FDI) into manufacturing. In the first half of 2025, Vietnam attracted nearly $12 billion USD in FDI to its manufacturing sector — the highest level since 2009 — marking a 32% year-on-year increase and accounting for over 56% of total registered capital.

This robust inflow is not only transforming the country’s industrial landscape but also signaling Vietnam’s rising role in the global supply chain amid shifting geopolitical dynamics.

Industrial real estate rides the FDI wave

The surge in manufacturing FDI has directly impacted Vietnam’s industrial property sector. Both domestic and international companies are aggressively expanding their industrial footprints, investing not just in land but also in infrastructure, logistics hubs, and ready-built factories (RBFs).

According to John Campbell, Director of Industrial Services at Savills Ho Chi Minh City, this 32% rise in manufacturing FDI represents more than a statistical spike — it’s a structural shift in Vietnam’s economy. “This growth supports Vietnam’s roadmap toward high-value and sustainable industrial development,” Campbell said.

The country's manufacturing output rose by over 10% year-on-year, contributing approximately 2.6 percentage points to national GDP. Campbell emphasized that this is not a short-term boom, but a strategic transition fueled by Vietnam’s positioning as a trusted production base.

Vietnam rises in global production chains

Vietnam’s FDI performance is intricately linked to global shifts, particularly the “China + 1” strategy adopted by multinational corporations seeking to diversify supply chains amid ongoing trade tensions and tariff uncertainties.

Campbell highlighted several contributing factors to Vietnam’s attractiveness:

Stable political environment and investor-friendly tax policies

Proximity to China with competitive labor costs

Access to 65% of the global market via FTAs like RCEP, CPTPP, and EVFTA

Emerging green and high-tech investments, including LEGO’s eco-friendly factory and advanced chip-packaging projects

“These trends are redefining Vietnam beyond a cost-driven hub — the country is now seen as a center for high-value, sustainable manufacturing,” Campbell noted.

Shift toward ready-built factories

A significant market development is the rising dominance of ready-built factories (RBFs) over traditional land acquisitions. RBFs offer fast deployment, lower capital outlay, and higher flexibility, making them ideal for agile investors.

Occupancy rates for RBFs have reached 88–89% in key industrial zones, while absorption rates are at their highest in three years. “This is a turning point,” said Campbell. “Investors are prioritizing plug-and-play models that align with ESG and green standards.”

While greenfield development continues, it remains capital-intensive and time-consuming, giving RBFs a clear advantage—especially for tech-driven firms requiring sustainability certifications and swift market entry.

What International investors now expect

Campbell shared key expectations from foreign investors eyeing Vietnam’s industrial real estate:

Quick deployment timelines

Reliable power infrastructure with renewable energy options, dual power sources, and direct power purchase agreements (DPPA)

Green-certified projects (LEED/EDGE) and sustainable industrial parks

Strategic location near seaports and highways

Transparent legal framework and clear land valuation processes

Skilled labor, particularly in electronics and semiconductors

These expectations reflect a shift toward value-added production, where sustainability, technology-readiness, and speed-to-market outweigh cost considerations alone.

Policy and infrastructure recommendations

To maintain momentum, Campbell recommends several strategic actions:

Expand infrastructure connectivity, including completing the 3,000 km expressway target, and upgrading seaports and inland container depots (ICDs)

Promote more ready-built and build-to-suit (BTS) factories that meet international standards

Align incentive policies with the global minimum tax framework without diminishing Vietnam’s investment appeal

Invest in high-skilled workforce training, especially in semiconductor and high-tech industries

“These steps are essential not only for the healthy growth of Vietnam’s industrial real estate sector but also to strengthen its positioning in the global value chain,” Campbell concluded.

Vietnam's record-setting FDI inflows are far more than a statistical milestone—they’re a signpost of the country’s structural economic evolution. With global supply chains realigning, Vietnam is no longer just a low-cost option but a strategic investment destination, offering modern infrastructure, green-ready industrial assets, and a growing talent base.

As the country doubles down on industrial upgrades and policy innovation, Vietnam’s real estate market is poised to become a cornerstone in its long-term economic rise.

Anh Nguyen