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Vietnam’s industrial real estate – a high fever

Monday 06, 07 2020
Vietnam’s industrial real estate segment has shown its attractiveness when it draws great attention of many domestic and foreign businesses.
Vietnam’s industrial real estate – a high fever
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Attractive destination

Statistics of the Ministry of Planning and Investment show that in the first 6 months of 2020, industrial zones (IZs) and economic zones (EZs) in Vietnam attracted about 335 FDI projects with the total registered and newly added capital reaching about USD 6 billion. As of June 2020, Vietnam had had 336 IZs with a total land area of about 97.8 thousand hectares, in which industrial land area accounted for nearly 66 thousand hectares.

According to Real Estate Activities Report recently published by VietnamCredit, industrial real estate will enjoy a lot of advantages when the economy is stable, Vietnam is participating in trade agreements, and there are supporting policies of the Government for investors.

Mr. Matthew Powell, Director of Savills Hanoi, said that the demand for industrial real estate is always available, and Vietnam's successful control of Covid-19 is an important pulling force to attract more foreign capital and at the same time encourage investors to strongly shift to the domestic market.

"Regional investors are keen to enter the industrial real estate market in Vietnam. We are working with a number of investors from Asia - Pacific, Australia, UK and USA," said Mr. Matthew Powell.
The expert also said that Vietnam is the most reasonable choice compared to other countries in the region. The cost is very attractive to investors, in addition to the well-developed infrastructure and ideal support from the Government.

Sharing the same view, Mr. John Campbell, Head of Industrial Real Estate, Savills Vietnam, said that many US and Japanese companies have gradually left China, and Vietnam is considered their first choice of replacement.

However, according to him, there are several factors that need to be upgraded and improved, such as infrastructure, logistics, and land prices. In fact, land prices in Vietnam have also been rising rapidly in the past few years as many countries have decided to shift their focus to the Vietnamese market.

A rat race toward industrial real estate

Vietnam’s industrial real estate – a high fever

Many real estate “giants” have been planning to focus their resources on the field of industrial real estate.

Recently, Tizco Joint Stock Company and Vietnam Innovation Parks Group JSC (VNIP) have organized the groundbreaking of Viet Phat Industrial Park and Urban Area project with an area of more than 1,800 hectares. The project is located in Tan Long commune, Thu Thua district, Long An province, and is one of the largest industrial parks at the moment. 

At the end of March, Vinhomes JSC announced that it would receive a share transfer in Vinhomes Industrial Park Investment JSC, thereby becoming the parent company of this enterprise. Accordingly, the company will play the role of investing in industrial real estate of Vingroup, in order to catch up with the growth of foreign direct investment in this field.

Also, at the end of March, Hoa Phat Urban Development and Construction Joint Stock Company (a member of Hoa Phat Group) sent a document to Hung Yen People's Committee asking for approval of the research, survey and planning to implement the investment project of Bai Say Industrial Zone in the communes of Bai Say, Phu Ung and Bac Son (An Thi district).

Not only industrial real estate businesses, textile companies like Binh Thanh Import Export Production And Trade Joint Stock Company also showed that it is very urgent when facing the industrial real estate fever.
Recently, the company's board of directors have submitted to its shareholders for the approval of raising more than VND 2,000 billion of investment capital for this year. The company is expected to increase its stake in Gilimex Industrial Park Corporation with an estimated total investment of VND 3,000 billion. Specifically, the minimum contributed capital is VND 255 billion (equivalent to 51% of the charter capital) and the maximum contributed capital is up to VND 475 billion (95% of the charter capital).

Similarly, despite business difficulties in the first 6 months of 2020, SAM HOLDINGS CORPORATION has recently announced that it is planning to acquire and pour more capital into Capella Quang Nam to implement the project of Tam Thang 2 Industrial Park.

According to the Executive Board of the company, this is a promising business segment in the context that Vietnam is a country with a high working age population, cheap labor costs, available raw material areas, etc.
Besides, some other real estate businesses also consider industrial real estate as a delicious piece of cake. For example, JSC DRH Holdings said it would, based on the company's capital structure, develop industrial real estate this year.

>> 
Real Estate Industry Report

Source: Real Estate Activities Report - VietnamCredit

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