Industrial real estate increasingly attractive to investors

May 20, 2023 | 09:00
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A total of $8.88 billion was in registered foreign investment in Vietnam as of April 20, in which real estate ranked third with nearly $972 million. Truong An Duong, general manager for North Vietnam and Residential at Frasers Property Vietnam, shared methods to lure in more investment to Vietnam's industrial real estate market with VIR's Bich Ngoc.
Industrial real estate increasingly attractive to investors
Truong An Duong, general manager for North Vietnam and Residential, Frasers Property Vietnam at the conference "Strong Investment Partnerships for a Thriving Vietnam" held by VIR in Hanoi on May 15

How has the industrial real estate segment changed in the past five years?

We have observed that more foreign investors are promoting investment in the industrial real estate segment, especially in ready-built factories and warehouses. In the past five years, investors have increased supply. This trend will continue to be promoted in the next 3-5 years.

In terms of product types, we find that industrial real estate products are becoming more specialised, closely following green criteria and green certificates to meet the needs of manufacturers from all investors and manufacturers from over the world, especially from the US, Europe, and Asia, where green factory standards are being brought to the forefront. Therefore, there will be a strong transformation in the trend of green development in industrial real estate in the coming time.

In addition, industrial zone (IZ) real estate also needs more facilities for workers and manufacturers, especially foreign ones in Vietnam. There is a demand to further develop services for manufacturers and customers in IZs, such as legal consulting services and licence support in the process of working with the government, tax, and human resources consultants.

Vietnam's industrial zone real estate supply in the past 5 years has increased by 20-30 per cent per year on average. In the next five years, the supply will increase a lot in the northern market, and the supply of ready-built warehouses will increase from 30 to 40 per cent per year.

Therefore, in the near future, there will be oversupply in some markets where conditions are not ideal enough to attract manufacturers.

What should Vietnam do to attract more overseas funding into real estate?

Vietnam has had the advantages of market potential, population, income, and good economic characteristics in the past 30-40 years.

However, in recent times, real estate investors have also encountered many difficulties in terms of institutions and laws, especially in land regulations. Soon, the government will approve basic new legal amendments, especially the policy allowing foreign investors and real estate investors to access land funds and accelerating the approval process and approving the investment policy of real estate projects, especially residential real estate and commercial real estate. All of those will be the factors that seriously promote the development of the market.

Recently, industrial real estate is a hot topic, thanks to the improvement of the legal corridor as well as the encouragement of investment in production. The market for industrial real estate development has developed very well in Vietnam. We hope that the inflow of foreign investment into Vietnam in general will grow more in the fields of manufacturing and infrastructure development, especially in the high-tech sector, which will bring great benefits to the economy of the country.

What has Frasers Property's performance been like in the Vietnamese market?

The company is focused on the human experience and sustainable development to create lasting shared impact for people, businesses, and our local communities.

We’ll continually be searching for more and more ways to reduce our impact and reinforce our intent to be a net-zero carbon organisation by 2050. Across our Vietnam portfolio, we want to champion sustainable development and innovation across the real estate value chain.

Following the completion of the refurbishment works in 2021, Melinh Point is now equipped with a plethora of new green features with the adoption of environmentally friendly and advanced technologies to transit to lower-carbon energy sources.

Elsewhere, Binh Duong Industrial Park is striving to achieve LEED Green Building certification standards that focus on enhancing customer-centricity with purpose and innovation.

Our commercial development, Worc@Q2 is also on track to pursue green certifications, demonstrating that sustainability, technology, and wellbeing features are being incorporated throughout.

Leveraging our global expertise in industrial and logistics, we are developing smart, modern, and sustainable industrial facilities in Vietnam, which will cater to a new innovative segment of premium industrial estates. A first for a developer in Vietnam, the Premium Estates concept will see Frasers Property developing high-quality industrial products with strong sustainability and technology features aimed at supporting workplace productivity and occupiers’ health and wellbeing.

The developments will also aim for international green building certifications in line with the group’s sustainability targets.

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By Bich Ngoc

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