Vietnam's cold storage market is set to hit the US$295-million mark by 2025, thanks to booming demand for distribution of vaccines and high growth in the seafood industry, according to real estate consulting firm Cushman & Wakefield (C&W) Vietnam.

A cold storage facility of Tan Long Mechanic Electric Refrigeration Company. Source: Tan Long Company

For the past two years, the cold storage market in Vietnam has recorded strong growth in line with the rise of the food delivery sector and e-commerce activities, estimated to reach $15 billion by 2025.

Meanwhile, local consumers are starting to turn to organic and quality products, which prompted high demand for cold storage and further investments in the cold storage supply chains.

The C&W Vietnam’s report also mentioned a large inflow of investment capital from emerging economies in Asia that are looking for business opportunities in this niche market via new projects or M&A activities.

General Director of C&W Vietnam Trang Bui said the local cold storage market remains in the early development stage, estimated at around $169 million in 2019.

So a market size of $295 million by 2025 would mean an annual growth rate of 12%, which remains feasible due to high demand for vaccine distribution and consumer consumption, Trang said.

The report identified the southern region as a potential hub for the cold storage market, with the high concentration of agricultural and aquaculture production, especially in Long An Province with close proximity to Ho Chi Minh City.

Cold storage is normally more expensive compared to traditional storage by 50-100%. The leasing prices for cold storage of frozen products are estimated at around $45-09 per square meter and $45-160 for medical products.

Despite the huge potential, experts at C&W Vietnam pointed out the lack of adequate logistics infrastructure, especially distribution hubs and multimodal transportation options, could hinder the development of the sector.

Even after the pandemic, the report expected the sector to continue rising, thanks to high consumer demand for fresh products and the emergence of advanced medical treatments.

“There could be a change for the cold storage industry from a niche market to a key one in just a few years,” it said.