A new Japanese story unfolds

A strong Yen is giving Japanese great leverage in Vietnam

Neil MacGregor, deputy managing director of Savills Vietnam, said: “Japanese investors tend to follow in each other’s footsteps. For example, the initial wave of manufacturers is now attracting supporting industries and those investors require office space, so developers are looking for opportunities to build office buildings, the expatriates require housing and so forth.”

He cited Japanese investors Sojitz, Daiwa House and Kobelco Eco-Solutions in the Long Duc Industrial Zone in Dong Nai province, who were catering to the wave of Japanese manufacturing firms. The $100 million industrial park, which started construction recently, is expected to attract 100 to 150 Japanese manufacturing enterprises after completion.

Tokyu Corporation is also cooperating with Becamex Group to develop a new $1.2 billion urban area in Binh Duong province which is home to many Japanese small and medium manufacturers.  

Ho Van Nien, vice chairman of Ba Ria-Vung Tau People’s Committee, told VIR that many investors from Japan’s Kansai and Kawasaki areas were coming to the province and had expressed their willingness to develop industrial parks to attract more Japanese firms working in supporting industries, logistics, tourism and education.

In the north, Haiphong is planning to cooperate with Japanese-backed Forval Corporation to develop a supporting industrial park. Marc Townsend, managing director of CBRE, said that setting up property projects for the working and living demands of Japanese manufacturers was only one of the reasons explaining the rush of Japanese investors to Vietnam’s realty market.

Townsend said Japanese investors wanted to invest as much as possible now because of the strength of the Yen and low borrowing interest rate of around 2-4 per cent, per year on offer at most Japanese banks.  

“They [Japanese investors] love Vietnam’s realty market, which offers rare opportunities to acquire realty projects at cheap prices from developers who are suffering from huge pressure because of bank debts or from a lack of money to continue constructing their projects,” said Townsend.  

MacGregor said that Japanese investors were looking for assets where they could minimise their risk and this normally required a controlling stake in the development, or possibly 100 per cent ownership.   

“They [Japanese investors] are looking to maximise the effectiveness of their experience and, in the case of office developments, to cater to the high demands of Japanese tenants in terms of quality and building management.  Other investors may seek scale through purchasing stakes in Vietnamese developers,” added MacGregor.

He  said Japanese investors were seeking domestic companies or property projects that allowed them to access the Vietnam growth story. Typical examples are the retail and residential sectors where they could take full advantage of the young demographics and with the interrelated shift in the spending patterns and living habits of this young and dynamic population.  

It was also important that these local companies showed a high level of transparency and good corporate governance.