Industrial and logistics sector in Vietnam: Resilience during uncertainties

JLL reported that the price of many construction materials have increased by 25 per cent from early 2021, especially that of steel.

Industrial structure is made up of 50-60 per cent steel, rebar; special structure may, notably, require up to 70 per cent, which leads to higher construction cost, Tran Huynh, chief operating officer of KCN Vietnam commented.

Furthermore, the outbreak of the COVID-19 pandemic, strict social distancing, and restrictions on movement have caused construction delays or postponements, affecting project schedule, thereby posing a difficult dilemma for both investors and contractors.

Ride the big wave

How investors prepare for uncertainties

Regardless of pressure from the pandemic and social distancing, the industrial and logistics real estate industry still sees potential growth, attracting a large number of foreign investors when strict social distancing measures fuel the dramatic acceleration of e-commerce as consumers stuck at home flock to online shopping.

JLL forecasts logistics and industrial investment volumes to rise to $50-60 billion between 2023-2025 from $25-30 billion in 2019-2020 in the Asia-Pacific. The entry of such new investors such as GNP Industrial and KCN Vietnam Group JSC, among others into the local industry is a further testimony of this “big wave”.

Many investors are starting to increase their exposure to logistics assets while they look to allocate capital into stable income-producing assets, highlighted Trang Bui, head of Markets, JLL Vietnam.

Following latest trends

Lysaght Bondek II is the optimal solution for multi-floor warehouses, helping investors save costs by 15 per cent and shorten the construction progress by 20 per cent

The chores of the logistics industry now go beyond simply storing goods. Instead, it needs to provide value added services that can only be met by high construction quality. At the same time, multi-floor warehouses and buildings emerge as a new trend due to the skyrocketing land prices. In addition, investors are increasingly focusing on sustainability, including building design to source of materials. Last but not least, it is the popularity of ready-built factories to meet the demands of small- and medium-sized foreign-invested enterprises.

Taking advantage of these trends will help manufacturers improve their competitive edge amid the pandemic and material price escalation. As stated by Nguyen Cao Tri, president, NS BlueScope Lysaght Vietnam, in response to the market’s demand for multi-floor warehouse, BlueScope is launching Lysaght Bondek II that enables investors to save up to 15 per cent on costs and accelerate construction progress by 20 per cent. This unparalleled solution uses new-generation steel that integrates the breakthrough Activate technology known for its unique microstructure of four phases, enabling projects to sustain and withstand the test of time.

Agility to cope with instability

“The spread of the pandemic and soaring prices of construction materials present tough challenges for the construction industry, yet there will always be ways for enterprises to mitigate these risks,” said Nguyen Cao Tri, president, NS BlueScope Lysaght Vietnam

“Businesses need to adapt to the market changes, including multiple sourcing to ensure stable supply without compromising product quality, being agile in operation from plan to production, as well as offering suitable options to customers in both short and long term,” Tri shared.

In light of customer’s diverse demands and a rise in material prices, NS BlueScope Lysaght Vietnam has launched ECOSEAM and ECOLOK as economic offers apart from the current premium product ranges such as SMARTSEAM and KLIPLOK.

“The spread of the pandemic and soaring prices of construction materials present tough challenges for the construction industry, yet there will always be ways for enterprises to mitigate these risks,” Tri concluded.