Although warehouse real estate is the most promising segment in the industrial property market for foreign investors, the lack of synchronous transport connectivity is a major deterrent for many looking to expand their warehouse systems in Vietnam.
|Better linkage sought in warehouse system, illustration photo. Photo: freepik.com |
Paul Fisher, country head in Vietnam of JLL, said that compared to regional peers, the local logistics market is still at a nascent stage.
“We see some much-needed investment going into infrastructure, as well as private sector funds into developing state-of-the-art facilities. Driven by growth in e-commerce and manufacturing, as well as growing domestic consumption, we believe that the Vietnamese logistics market will continue to thrive and evolve in the same way we have witnessed in other markets,” Fisher said.
Vietnam, which has been one of the fastest-growing e-commerce nations in Southeast Asia even before the pandemic, has seen a massive acceleration in the segment in 2020-2021 as shoppers stuck at home have taken their purchases online.
“Logistics is crucial to the day-to-day operations and future success of the Vietnamese e-commerce market. Many foreign logistics providers are moving to meet the rapidly growing needs of the market,” said Fisher.
These trends are only expected to grow stronger over the coming years as Vietnam move from a production to a consumption hub, with logistics providing a key foundation.
Experts also said that industrial real estate in Vietnam is only in the initial stage of linking supply chains, warehouses, and the infrastructure system. Thus, it needs the right strategies to support investor participation as well as better human resources that can meet the increasing demands of foreign investors.
“The government needs to ramp up infrastructure development so that the private sector can deploy projects offering logistics and supporting services,” said Su Ngoc Khuong, senior director from Savills Vietnam.
“Export-import procedures are another problem to consider. Supporting domestic and foreign businesses in clearing and exporting goods will help reduce costs, attracting other foreign investors,” he said.
Vietnam’s industrial real estate sector is one of the greatest attractors of foreign investment, with world-class names like GLP, LOGOS, Warburg Pincus, DSV, and Frasers Property, among many others, already present. However, the market is in close competition for foreign investment with China, Thailand, Malaysia, Indonesia, Singapore, and even the Philippines, urging an even more conducive environment for investment.
With the aim of pairing runaway growth potential in consumption and trade with improved infrastructure, the National Assembly is discussing public investment until 2025. It is estimated that a total of $35 billion will be invested in the next five years in the southern provinces alone, benefiting industrial producers and the logistics market as a whole.
Remco Enders - Managing director, DSV Logistics Co., Ltd.
DSV is currently present in all logistics hotspots across Vietnam and aims to increase not only its footprint, but also services and vertical differentiation.
With a new site just across the bridge into Dong Nai, DSV is well-positioned for industrial logistics and domestic distribution with DSV trucks and line hauls, while our existing downtown site specialises in consumer goods and e-commerce, providing instant deliveries via our motorbikes.
Combining our experience from Dong Nai with our Binh Duong and Tan Binh operations, the common denominator on my wishlist relates to accessibility and infrastructure.
For the logistics side of this development, the connectivity from factory to port is essential, but so is warehouse to consumer connectivity for the local population to enjoy the fruits of their efforts.
Steven Li - Head of Overseas Planning and Execution, JD International Logistics
In 2018, we signed a share subscription agreement as co-lead investor in Tiki’s Series C financing round. The partners have been cooperating in a range of areas, including merchandising, cross-border trade, logistics and fulfilment, technology, financing, and more.
Vietnam has an important impact on the overall market activity and trade richness of the region. JD.com has always attached great importance to the collaboration opportunities in this area.
We believe that with the further strengthening of our collaborations in Vietnam, JD will have a more strategic layout in the market, helping us closely monitor the market opportunities and understanding of local customers. We also hope to work with more and more partners in Vietnam to provide a world-class online shopping experience to its customers.