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Jun 14, 2018 / 08:35

Foreign investors eye Vietnam's industrial properties a fruitful land

Foreign developers are enhancing the investment in Vietnam`s industrial real estate projects to seize huge opportunities as the Southeast Asian country is projected to witness a strong manufacturing growth in the near future.

In May, BW Industrial Development JSC (BW Industrial), a joint venture between the US private equity fund Warburg Pincus and Vietnam's Investment and Industrial Development Corporation (Becamex IDC), commenced operations in the southern province of Binh Duong.  
Vietnam is now considered the new workshop by manufacturers around the world.
Vietnam is now considered the new workshop by manufacturers around the world.
With over two million square meters of industrial land and US$200 million in initial capital, BW Industrial is considered the largest supplier of industrial properties and logistics services in Vietnam.
In particular, the joint venture plans to develop and provide institutional-grade industrial and logistics properties across the country in all key economic regions. It has bought land for eight projects in five localities in key economic zones in the north and south, including Binh Duong, Dong Nai, Hai Phong, Hai Duong and Bac Ninh.
Before Warburg Pincus, many Japanese investors, such as Kizuna JV, Chodai, Kobelco Eco-Solutions, and JESCO Holdings, had also sunk considerable amounts of money in industrial infrastructure facilities, particularly construction of factories for lease.
Besides new entrants, existing players such as Thailand's Amata and Singapore's Sembcorp, which have invested in industrial parks in Vietnam for a long time, are also planning to build more factories in anticipation of new investors to flock to the country soon.
Last March, Amata Vietnam received a license from Quang Ninh Province's People's Committee to build the Song Khoai Industrial Park in Quang Yen Town.
Hemaraij, another Thai investor, is also working with a Vietnamese company to build an $1 billion industrial zone in the central province of Nghe An on an area of 3,200 square meters.
Vietnam: a 'strategic' destination
Experts attributed the rising investment in Vietnam's industrial properties to the reason that more and more foreign companies want to do business in Vietnam because the country remains a "strategic" destination and is now considered the new workshop by manufacturers around the world.
A report released recently by Jones Lang LaSalle (JLL), American professional services and investment management company specializing in real estate, showed that Vietnam would continue to be in the top three target markets for international investors, especially those from Japan, South Korea, China and Singapore.
Vietnam currently offers many advantages, including affordable labor costs and incentives for investors in economic zones.
Besides, it has signed many free trade agreements (FTAs), including with the EU and South Korea, and recently joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is expected to bring 90 percent of trade tariffs between its 11 economic members down to zero, creating free trade in the Asia Pacific region.
Vietnam is thus a magnet for foreign investors who want to exploit the vast free trade market created by its FTAs and the CPTPP. FDI in the country skyrocketed from $24.86 billion in 2016 to $35.88 billion last year, according to the Ministry of Planning and Investment.
Stephen Wyatt, Country Head for JLL Vietnam, believed that Vietnam is grasping the attention of foreign investors with 80 percent of the investments poured into the industrial and manufacturing sectors.
Many investors are shifting their capital from China to Vietnam as Vietnam has sound planning for industrial parks and the government is considering the establishment of specialized economic zones which offer preferential taxes for corporations, he stressed.
According to the government, approximately 38,461 ha of additional land is planned for industrial growth until 2020, nearly double the current market size. Thus, huge opportunities exist in the Vietnamese market for both existing players and potential new market entrants to access potential land bank and capture market share.
"It's a fantastic time to be in the industrial and logistics advisory business," Alex Crane, General Manager of Cushman & Wakefield Vietnam, an American real estate services company, said.