Frasers Property Vietnam commits to strong values

August 21, 2023 | 15:55
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Frasers Property Vietnam is developing its first industrial property in Vietnam with Binh Duong Industrial Park. Chong Chee Keong, general manager for Industrial, talked to VIR’s Bich Ngoc about the company’s commitment to this segment in Vietnam.

Foreign investment continues to be the main driving force for the development of the industrial property market. How do you evaluate the movement of new capital from current and future tenants?

Frasers Property Vietnam commits to strong values
Chong Chee Keong, general manager for Industrial

Overall, Vietnam’s economy shows promise and resilience in the face of global headwinds. We do see some recovery recently and diversification of the investment focus. Particularly in Vietnam, when real estate sectors are still facing difficulties, we see the interest has moved into infrastructure and renewable energy sectors which align with the government’s direction to boost national infrastructure capabilities.

We see this as a good opportunity for Vietnam to upgrade towards more sustainable development and prepare for future trends into environmental, social, and governance (ESG) efforts. In 2023, industry and construction accounted for one-third of the national GDP and will require at least another 9-12 months for the government to resolve the financial and legal policy before we see the recovery of these sectors.

Issues related to procedures, infrastructure, land, and fire protection are posing challenges in attracting investment into industrial property. What challenges are you facing in project implementation?

Frasers Property did not face many problems while executing projects in Vietnam’s North. However, we ran into some procedural challenges with building licenses as well as problems with land in the South. However, up to now, the local governments have been working efforts to make those procedures easier and more supportive for Frasers Property Vietnam.

The demand for industrial real estate, such as industrial land, infrastructure, RBF, RBW, etc., serves to restructure the Chinese side of the manufacturing supply chain. and there has been a significant increase from the Vietnamese side. Additionally, multinational manufacturers from Asia, Europe, and the US are increasingly choosing Vietnam as their top destination.

In the future, we expect that Vietnam would implement additional policies to welcome and promote foreign investment, particularly in production and emerging industries. This will make Vietnam’s industrial development and involvement in global production and supply chains more prominent.

Domestically, the supply of industrial property in the secondary market tends to increase. Does this make competition between traditional and new markets more intense?

Based on our observation, the improving infrastructure network (connectivity within tier 1 and tier 2) plays an important role in facilitating expansion of the industrial market.

Tier 2 provinces will benefit from the spill-over effect when established areas in tier 1 become more competitive for new development or expansion. Queen bees entering a tier 2 province is also seen as a good opportunity for developers like Frasers Property as the entering point to engage in the supply chain and service clusters.

Frasers Property Vietnam commits to strong values
Industrial Centre Yen Phong 2C

What are the main factors that need to be promoted to increase the efficiency of attraction in industrial property investments?

Accelerating construction, modernising, and sustainable infrastructure will empower Vietnam to reduce the barriers to trade and strengthen its ability to attract more foreign investment.

In the long run, Vietnam must develop a highly skilled and specialised workforce to meet production chains with high added value, which is an increasingly visible trend. Along with continuing to develop infrastructure, foreign investor production costs will be more stable. This will boost the attractiveness of Vietnam and encourage investors to remain here longer.

How important are aspects like innovation and digitalisation in the company’s efforts?

Sustainable development is at the heart of our strategy and contributes considerably to Frasers Property’s success. The main principles that we agree to develop in all projects are green and responsible solutions, together with health and wellbeing amenities. To be genuinely efficient, a good development must be well-built and operated on both hardware and software levels.

For hardware, our facilities are customer-centric design specifications, bringing utmost operation efficiency and future-proof to the enterprises’ benefits. For software, we focus on people, improving human resources and service-oriented.

Technology is not the main objective at Frasers Property, but it plays an important role in connecting properties, people, and processes through data information systems, implementing digital solutions to improve productivity, and leveraging data analytics to provide a great experience for our customers and employees.

We’ve carried out plenty of steps to improve the group’s ability to digitalise, whether in structures, workflows, or even in the neighbourhood, in order to keep ahead of technological trends.

The most important qualities for any business are originality and innovation. We encourage our staff to be innovative and creative while coming up with ideas to achieve sustainability. Innovation is defined by Frasers Property as modifications that enhance value. To make investment and management decisions for these assets, we also have a long-term perspective and take the entire asset lifecycle into account.

Last but not least, we guarantee a safe, inclusive workplace and neighbourhood. We have established a group-wide sustainability framework in all of our present markets to empower employees and align the entire company with a focus on sustainability. Every step of our value chain incorporates ESG factors.

Despite the economic slowdown, prices of industrial property and warehouses in Vietnam have continued to rise. Do you believe this is sustainable in the long term?

The trend of industrial and warehouse rents will continue to rise in the short and medium term because of limited supply against the demand, which mainly comes from China+1 relocations.

In the long run, we think that Vietnam will continue to be a popular destination for investors due to its rising position in the supply chain, rising domestic demand, and developing logistics infrastructure. In addition, rents will rise as prospects strengthen.

Frasers Property Vietnam offers enticing warehouse and factory concepts Frasers Property Vietnam offers enticing warehouse and factory concepts

Industrial and logistic real estate are becoming increasingly more attractive as Vietnam benefits from the shifts in global supply chains, the strong effects of many free trade agreements, and its liberalised trade base.

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By Bich Ngoc

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