Experts delve into outlook of Vietnam's industrial real estate market at VIPF 2024

VIPF 2024, organised by Vietnam Investment Review in coordination with the Vietnam Industrial Real Estate Association, took place in Ho Chi Minh City on July 30 with the theme “Going green for new investment waves”.

Truong An Duong, general manager of North Vietnam and Residential, Frasers Property Vietnam, said, "Over the past few years, up to 60 per cent of foreign direct investment (FDI) in Vietnam has focused on the manufacturing industry, creating additional demand for industrial parks and amenities for manufacturing industries. Vietnam has made great strides in infrastructure development in recent years. This includes roads, ports, airports, and energy networks. These factors have enhanced Vietnam’s competitiveness in global manufacturing circles. Departments and local authorities have conducted investment promotions which have drawn multiple delegations. This, coupled with free trade agreements, has bolstered Vietnam’s competitiveness amid global trade disruptions."

"A new wave of FDI has been entering Vietnam, especially in the fields of semiconductors, electronics, automobiles, and renewable energy," Duong said. "However, Vietnam also faces increasing competition with regional peers like Thailand, Malaysia, the Philippines, and Indonesia. Other countries have also issued policies to lure investments in these fields. For example, Thailand boasts strength in automobile manufacturing and supply chains. Meanwhile, Malaysia has built a solid foundation for its semiconductor industry."

Dinh Hoai Nam, director and head of Business Development, SLP Vietnam, said, "As a market player, we expect a lot from the Vietnamese market in the long term. Firstly, Vietnam will continue to be a bright spot in the Asia-Pacific market for many years to come. Over the past four years, the country's market participation has accelerated. It is not by chance that investors are pouring capital into Vietnam because they make decisions based on many factors, including Vietnam's long-term prospects."

"According to SLP's assessment, we believe in the long-term outlook of the Vietnamese market, although there were some concerns in the market assessments last year. However, sentiment has returned to the market in the first six months of 2024 due to many factors. Specifically, last year, SLP also had an assessment related to the investment speed in Vietnam to decide whether we would slow down or have any oversupply in the market. We realized that there was an oversupply factor somewhere in the market, leading to competition in rental prices. However, the occupancy rate of our projects was relatively good. This led us to think that we should try to compete in depth, focusing on quality products," he noted.

Hardy Diec, COO of KCN Vietnam, said, "Vietnam is facing competition from China and other Southeast Asian countries. To adopt higher sustainability, we should implement sustainable development in a strategic and united way. We also offer a competitive picture to customers to demonstrate that Vietnam remains a magnet for FDI. We should be collaborating with other partners to persuade foreign investors about Vietnam's growing investments in infrastructure, as well as education and training programmes to improve the quality of human resources. Vietnam has also eased administrative procedures to improve the investment environment."

Vietnam is on the radar of multinational companies (MNCs), but they are concerned about these barriers. When MNCs enter Vietnam, they bring in their ecosystems and supply chains, creating new driving forces for the country to grow, he added.

Over the past few years, KCN Vietnam has placed its focus on ready-built warehouses and factories. Despite being a newcomer to Vietnam since 2021, the company has ambitions to diversify its product offerings to improve competitiveness. Notably, sustainable development is one of KCN’s orientations during its development journey in the country.

From the perspective of state management, Vu Van Chung, deputy general director of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, said, "Many investors consider Vietnam to be one of the most attractive investment destinations. This is a great opportunity for us to attract quality investment so that the industrial real estate market can boom. In terms of political stability, investors still consider Vietnam an attractive destination for long-term investments. The economy has maintained a stable, high growth rate for many years, with deep integration into the global economy. Vietnam has signed 16 free trade agreements, covering almost all major economies."

Regarding human resources, Chung added, "Vietnam has a market of more than 100 million people, of whom about 50-60 per are of working age. This labour force is being trained and equipped with skills and knowledge. Instead of attracting investments in low-cost labour, we now have a high-quality labour source to meet the requirements of foreign investors. On top of that, the government is making strategic breakthroughs with outstanding infrastructure development in roads, seas, aviation, and railways. The government is determined to implement institutional reform to improve the investment environment. The government has also established working groups in industries such as semiconductors, AI, and high-tech to direct and promote investments."

Trang Le, head of Research and Consulting, JLL Vietnam, said, "Over the past five years, Vietnam has recorded a high growth rate of industrial real estate. In 2023, FDI rose by 34 per cent, indicating Vietnam as a bright spot in global FDI attraction. To find spearhead sectors, Vietnam should look at its existing foundations, such as factories. The government also wants to attract investments in key sectors, with legal frameworks in place to support investors."

"Vietnam has a golden opportunity to lure FDI, but the country needs to look at fresh policies to catch investors' eyes. These advantages, which transformed Vietnam into a manufacturing hub, will not last long. Investors always weigh up their options, and other countries have already sped up their strategies to woo investments. Vietnam should take quick action to maintain its position, like promoting sustainable development and streamlining administrative procedures."

Paul Tonkes, industrial deputy director at Indochina Kajima Development (ICCK), said, “We are also geared up towards sustainable development. Our commitments are reflected in our projects, which are designed in line with this trend. Tenants choose our products and solutions because of their environmental, social, and governance (ESG) standards. Green practices can help tenants reduce expenses for electricity and utilities.”

He further noted that there are a lot of green transition movements in the area. If industrial park management authorities want to adopt green transition strategies, specifically for the roofs or specific areas, they should take affordable expenses into consideration. They should cover these factors in their development plans. Several industrial developers have also focused on ESG to serve premium customers who love green design.

Industrial property event to take place in Ho Chi Minh City on July 30 The Vietnam Industrial Property Forum (VIPF) 2024, organised by Vietnam Investment Review and in coordination with the Vietnam Industrial Real Estate Association, will take place in Ho Chi Minh City on July 30.

VIPF 2024: Going green for new investment waves The Vietnam Industrial Property Forum (VIPF) 2024, organised by Vietnam Investment Review in coordination with the Vietnam Industrial Real Estate Association, is taking place in Ho Chi Minh City from July 30 with the theme “Going green for new investment waves”.

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