Industrial real estate market thriving on FDI flow: insiders

A green industrial park in Bac Tan Uyen district, Binh Duong province (Photo: VNA)

Hanoi - Despite formidable challenges for the real estate market in 2023, industrial property market has stood out as a bright spot that has maintained its growth momentum on the back of the foreign direct investment (FDI) flow, according to insiders.

While other segments showed signs of slowing to a crawl, industrial property continued to see growing rent demand, mostly from the FDI enterprises.

Director of the IIP Bac Hung Hai JSC Nguyen Huu Trang described the upgrade of the Vietnam – US relations to a Comprehensive Strategic Partnership last year as a boon for Vietnam to lure giants from the US and many other countries.

Meanwhile, Director General of the largest industrial real estate portal in Vietnam - IIP Vietnam – Doan Duy Hung said that most customers seeking industrial space were foreign companies, adding despite economic woes in the year, FDI capital kept flowing into Vietnam, backing the industrial property segment.

According to the Ministry of Planning and Investment’s Agency of Foreign Investment, as of December 20, 2023, total registered FDI into the country surged 32.1% year-on-year to nearly 36.61 billion USD. Disbursement of FDI capital hit a record high of some 23.18 billion USD, up 3.5% from the same time last year.

In the year, nearly 20.19 billion USD was funneled into 3,188 new projects, respectively rising 62.2% and 56.6% year-on-year.

Experts said this was a positive factor for the industrial real estate market, elaborating that an increase in the FDI capital means higher demand for land and warehouse space to serve foreign firms’ production and business.

However, they said opportunities are not equally shared among localities and investors of industrial parks due to disparity in industrial park development between regions, provinces and cities.

Hung said localities with advantages in transport, logistics, human resources, business climate and infrastructure are more attractive to investors than those without these conditions.

He suggested localities work to boost their own strengths, and improve capacity and competitive edge to lure more investors, with focus sharpened on transport and logistics infrastructure development, tax incentives, and trade promotion activities.

Chairman of S-Group Vietnam Corporation Han Minh Cuong highlighted that as digital transformation and green transition are an inevitable trend of the industrial real estate sector, it is necessary for investors to develop green and smart industrial parks.

International businesses have set strict standards on environment and technology when they invest in Vietnam, he said, adding many from the US and Europe expressed their wish to land investment in industrial zones meeting green and smart criteria.

However, challenges are on the horizon to branch out eco and smart industrial park, including incompletion of relevant regulations.

Relishing the prospects of industrial property sector’s better growth in 2024, experts said it will have an important role in leading the real estate market’s recovery in the coming time.

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