Hanoi (VNA) – The industrial real estatesegment has emerged as a driver of the property market after sailing throughthe economic storm last year thanks to the foreign direct investment (FDI)influx, experts have said.

The investment was funneled into 16 out of the21national economic sectors in January, of which real estate attracted thesecond largest amount with nearly 1.41 billion USD or 32.7% of the total FDI, upmore than 3.5-fold year-on-year.

In this regard, processing and manufacturing tookthe lead with some 2.54 billion USD, accounting for 59.1% of the accumulativeFDI and representing a year-on-year rise of 16.8%.

To lure more big projects and investors to Vietnam,the Prime Minister has assigned concrete tasks to ministries and agencies, said DeputyMinister of Planning and Investment Tran Quoc Phuong, adding his ministry willprioritise investment attraction to science-technology, innovation, semiconductorchip and new industries.

According to the official, issues regardinginfrastructure and land remain concerns for foreign investors. Therefore,large-scale infrastructure projects should be sped up and more attention paid to the enforcement of the amended Land Law.

Industrial land lease prices are forecast to increaseby 5-9% annually in the northern region, and 3-7% in the south thanks to therising demand from industrial groups, said property consultancy CBRE Vietnam.

Ready-built warehouse rental prices are anticipatedto climb by 1-4% in the next three years, it said.

The firm noted that the bright prospects are attributed to the continued expansion of foreign businesses in Vietnam and therising registrations of new foreign investors.

Occupancy of industrial land in the northand the south stood at 81% and 92%, respectively, in the fourth quarter of 2023.

The total area of new industrial property sold inthe north jumped 37% to a five-year high of over 800 hectares.

But it fell by 32% in the south due to the limitedsupply of new land, although it remained high at 500 hectares in terms of area.

In addition to the electronics and auto industries,high-tech ones such as electric vehicles, semiconductors, and greenmaterials are also eyeing Vietnam’s industrial real estate, CBRE noted.

CBRE Vietnam Senior Director Nguyen Hoai An saidsemiconductors and EVs are predicted to boost the future demand, especially inthe context that Vietnam is expanding its cooperation with major economies.

However, the country needs to make preparations interms of infrastructure, human resources and quality industrial products tomaximise these opportunities, she suggested.

Paul Tonkers, Deputy Director of Industrial Real Estateat Core5 Vietnam, said he believes that investors are focusing on such high-value industries as electronics and semiconductors, so industrial park developers need torestructure their services and products to serve tenants' needs well.

Currently, not only auto component manufacturers butalso most of individual investors and international organisations view Vietnamas a potential destination, he stressed.

The industrial real estate segment is expected to remaina firm pillar this year on the back of the FDI flow which is on the rise thanksto tax incentives and perfecting infrastructure./.