Plenty of room for real estate market to develop: Experts

The real estate sector ranks second in foreign direct investment (FDI) attraction in the first quarter of 2023 with 766 million USD, accounting for 14.1% of total FDI.

These numbers reveal the attractiveness of the sector, especially industrial real estate, according to experts.

Data from the Foreign Investment Agency under the Ministry of Planning and Investment showed that as of March 20, total foreign capital from investors into Vietnam reached nearly 5.45 billion USD, equivalent to only 61.2% of that in the same period last year.

However, experts said that small and medium-scale foreign investors are still confident in Vietnam’s investment environment and continue to invest in new projects in the country, mostly in localities with high potential.

Tran Khanh Quang, General Director of the Viet An Hoa Real Estate Investment JSC, said that the strong investment in real estate reflects investor trust in the country’s environment in general and the property market in particular.

Notably, the industrial real estate segment has witnessed a boom again in Vietnam after a two-year hiatus due to the COVID-19 pandemic, he said, adding that Vietnam has gained great attention from global manufacturers with large investment demands, especially in the fields of technology, green energy, and logistics.

Although many experts asserted that FDI investment in 2023 may slow down due to the economic recession, others held that Vietnam’s industrial real estate market can still lure investors thanks to its advantages such as labour, population, infrastructure development, incentives for foreign investors as well as the Government’s efforts in maintaining macroeconomic stability.

John Campbell, head of Industrial Services at Savills Vietnam, analysed that Vietnam’s real estate market is benefiting from the advantages of the border opening process, the stable exchange rate and attractive corporate tax rates.

According to a Savills report, in the fourth quarter of 2022, many big deals were implemented. In the south, Matsuya R&D from Japan invested an additional 6.7 million USD in the production line in the Ho Nai Industrial Park in Dong Nai province.

Meanwhile, Giant Manufacturing from Taiwan (China) also poured an additional 13 million USD into VSIP 2 industrial park in Binh Duong province.

In the north, Taihan Precision Technology invested 5.3 million USD in Cam Giang district, Hai Duong province.

Recently, a delegation of 52 US businesses including Boeing, Coca-Cola, Meta, SpaceX, Netflix, Apple visited Vietnam to seek business and cooperation opportunities, showing the confidence of international investors in the Vietnamese economy as well as Vietnam’s potential to become the world’s new production centre in the fields of electronics, technology or high-value industries.

Campbell pointed out that seeking industrial land is becoming a difficult problem for businesses, as the occupancy rate is always high.

He noted that in some southern provinces such as Binh Duong or Dong Nai, the occupancy rate is always above 95%. Meanwhile in the north, provinces with developed industrial real estate markets such as Bac Giang and Bac Ninh see high demand with occupancy rates ranging from 96% to 99%.

According Campell, in the context of the limited occupancy rate in existing industrial parks, it is affecting the leasing of large areas. Addionally, the market’s new supply is also modest.

He believes that Vietnam’s industrial real estate market has plenty of room to develop with more diversified areas such as data centres, cold storage and logistics. Key opportunities in the logistics industry include last-mile delivery and the implementation of the 4.0 logistics system, he said.