Industrial property expected to heat up, driven by FDI influx

Demand for industrial land and ready-built factories is forecast to increase significantly this year, as investors can travel freely to Vietnam. (Photo: baochinhphu.vn)

Hanoi - The industrial property market is expected to heat up this year, driven by an influx of foreign direct investment (FDI), thanks to an improved manufacturing sector and border reopening which has helped raise investors' confidence.

On 15 March 2022, the Vietnamese Government allowed citizens of 13 countries, including Germany, the Republic of Korea, Japan, and France, to travel to Vietnam for 15 days without a visa.

“This is great news for the country’s industrial sector,” John Campbell, Associate Director, Head of Industrial Services at Savills Vietnam said.

“Vietnam’s border reopening is important in strengthening the confidence of international businesses and investors and is promising for the industrial sector,” he said, adding that in 2022, several prominent businesses had already invested in factories and expanded production in the country.

The industrial park market has been active with investment deals worth billions of dollars in recent months, he pointed out. For example, at the end of December 2021, Gaw NP Industrial broke ground on a ready-built factory project at the 16ha GNP Yen Binh 2 Industrial Centre. At the end of February, KCN Vietnam held a groundbreaking ceremony for a 13.4ha premium industrial facility in Phu An Thạnh Industrial Park, Long An province.

“The market has sprung into action since the start of the year,” John said.

In February, LOGOS Vietnam Logistics Venture and Manulife Investment Management established a joint venture partnership to acquire a 116,000sq.m, modern built-to-suit logistics factory valued at more than 80 million USD.

CapitaLand Development signed a memorandum of understanding to invest 1 billion USD in Bac Giang and will develop its first industrial park, logistics park and a township in the country.

BW Industrial Development JSC acquired 74,000sq.m of land in Bac Tien Phong Industrial Zone, developed by DEEP C Industrial Zones.

“Coupled with an encouraging reopening plan, the Government’s avowed support for foreign investors and the sheer resilience and adaptability of local enterprises are promising. It paints a reassuring picture that not only will the country recover but is likely to come back stronger than ever,” he stressed.

John said that the Vietnamese economy was forecast to grow beyond expectation in 2022, as domestic demand rebounded and FDI inflows remained stable, adding that business conditions also improved over the past five months following the disruption caused by the Delta wave of COVID in 2021.

He cited statistics of IHS Markit that the Vietnam’s PMI reached 54.3 in February, increasing from 53.7 in January, demonstrating that the manufacturing sector was in recovery mode with accelerated growth and improved investor confidence.

“Output and new orders had the best performance in ten months, and we saw remarkable growth in export orders too. Manufacturing employment levels increased for the third consecutive month; however, job creation remains modest as many workers have still not returned from their hometowns after the COVID outbreak last year,” John added.

Industrial production rose by 8.4 percent year-on-year in February, compared to a 2.8 per cent increase in January. Manufacturing output also improved from 2.8 percent in January to 10 percent in February.

From the beginning of this year, it could be seen that both domestic and foreign investors were strengthening the search for investment opportunities with great interests in ready-built factories, Tran Dai Nghia, director of FII Vietnam Consulting and Investment Co., Ltd, said.

Many companies would come to Vietnam to study business opportunities as the international flights were resumed.

Pham Van Tuan, deputy director of An Phat Holdings, forecast that demand would increase significantly this year, including for industrial land and ready-built factories.

Ready-built factories were being hunted from the beginning of this year as investors wished to start production as early as possible to re-establish value chains and take the opportunities to participate in the global value chain, which had been disrupted by the COVID-19 pandemic.

Statistics of the Ministry of Planning and Investment showed that Vietnam attracted nearly 5 billion USD worth of FDI in the first two months of this year, equivalent to 91.5 percent of the same period last year, of which, 2.68 billion USD was disbursed, up by 7.2 percent.

The country is expected to attract 40 billion USD worth of FDI this year.