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Vietnam’s industrial zone M&A expects an exciting year

Vietnam’s industrial zone M&A expects an exciting year

Tuesday 31, 01 2023
Industrial zone M&A activities will likely happen more in Vietnam in 2023, succeeding big deals in 2022.

Vietnam’s industrial zone M&A in 2022

Vietnam's real estate market experienced many fluctuations in 2022 when supply and liquidity were low. However, the industrial park segment is still a bright spot in the market when there are many M&A deals with great value.

Vietnamcredit CapitaLand Development

Specifically, in February 2022, CapitaLand Development (CLD) - the real estate development business arm of CapitaLand Group - signed a memorandum of understanding with the People's Committee of Bac Giang province to develop an urban-industrial project and logistics with a committed investment value of 1 billion USD. That is CapitaLand's first project to expand its portfolio from residential real estate to other asset classes, such as data centers, logistics, and industrial parks, after nearly 20 projects have been developed in Vietnam.

Another notable deal was the BW Industrial Development Joint Stock Company - an industrial real estate developer co-founded by Warburg Pincus and Becamex IDC, acquiring about 74,000 m2 of land in Bac Tien Phong Industrial Park in Quang Ninh province.

In the southern region, on March 24, 2022, BW Industrial Development announced a new land fund of 20.9 hectares in Vinh Loc 2 Industrial Park and 22.3 hectares in Xuyen A Industrial Park. The event marks BW's presence in Long An province and is part of its expansion strategy in key industrial areas adjacent to Ho Chi Minh City.

Aside from traditional real estate, an investment in data center real estate was also announced by Gaw Capital Partners, a private investment organization based in Hong Kong. They completed the acquisition of a land plot to develop a Level 3 data center in Ho Chi Minh City.

According to Kenny Gaw, Chairman and Co-Founder of Gaw Capital Partners, a fair number of factories in neighboring countries have relocated to Vietnam, since the country has a golden population structure, with 60% of the population being very young, highly productive, and hard-working. Vietnam also benefits from its strategic geographical position in the heart of East Asia.

Moreover, Vietnam is transitioning to a market economy, is a member of the WTO, and has signed many new-generation international economic agreements, notably the EU-Vietnam Trade Agreement (EVFTA), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Vietnamcredit WTO

Efficient labor costs, reliable infrastructure, and increasingly improved administrative processes have helped Vietnam attract big manufacturers such as Samsung, Foxconn, Nike, Adidas, Gap, Levis, Luxshare, and Pegatron.

Mr. Gaw assessed that the development of Vietnam's industrial real estate in the coming time would be the foundation to attract more foreign direct investment. With the impressive economic growth rate, the explosion of modern retail means such as e-commerce, and the wave of foreign investment in manufacturing facilities in Vietnam, the demand for high-quality industrial real estate is expected to grow tremendously.

Excitement to continue in 2023

The real estate market in Vietnam is increasingly receiving huge attention from foreign investors, especially for profit-generating projects. The development of private equity funds has provided an abundant source of capital to carry out M&A deals. These investors are constantly looking for active properties or looking to enter joint ventures with partners with a good reputation. As for domestic investors, the priority will be to purchase land for developing projects.

Ms. Trang Bui, General Director of Cushman & Wakefield, forecast that the investors will consider all the segments mentioned. However, the residential and industrial ones will attract the most attention from investors in the markets of Ho Chi Minh City, Hanoi, and neighboring provinces.

“The price of industrial land in Vietnam is still relatively low compared to Indonesia, Malaysia, and the Philippines. Therefore, along with other factors, Vietnam has a lot of potentials to become a leading industrial center in the region,” said Ms. Trang Bui.

In addition to the price advantages, Mr. David Jackson, General Director of Colliers Vietnam, assessed that the development potential of Vietnam's industrial real estate is still very large. That is due to the advantages of geographical location and stability, politics, abundant labor resources, many incentives in attracting investment, and supporting industrial development. At the same time, the potential for future price increases is very attractive, with an average increase of about 7-10% per year. Along with the trend of shifting supply chains from neighboring countries to Vietnam and the development of e-commerce, the need to develop logistics facilities, data centers, and cold storage is expected to increase in the coming time.

Vietnmcredit Colliers Vietnam

From the perspective of enterprises that have directly participated in the market, Mr. Lance Li, General Director of BW Industrial Development Joint Stock Company, said that Vietnam is attracting foreign investors. More and more investors are coming to Vietnam to find opportunities. The reason is that the industrial real estate market is developing in a good direction.

Specifically, Vietnam's effective control of Covid-19 has attracted investors from both traditional and emerging markets. Many investors have come to Vietnam to set up production facilities. All these investors are moving part or all of their supply chains to Vietnam.

Mr. Lance Li stated that Vietnam is attracting many foreign investors. Investors would deem Vietnam a place worth investing in and come here looking for opportunities. He added that with more investors coming to Vietnam, competition would follow. However, the competition would be welcomed, since it makes the market healthier and more sustainable.

 

Source: baodautu

Compiled by VietnamCredit

 

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