See Why Industrial Real Estate Supply Likely to Increase

Why is Viet Nam Attractive to Foreign Investors?

In H1/2022, GDP growth reached 6.4% YoY and inflation was less than 4%. Savills Industrial Insider highlights that the country’s economic strength underpins attracting foreign investment.

Other pull factors include Viet Nam opening its borders in early March, which put it in a competitive position given China’s borders remain closed. Viet Nam also has dynamic free trade agreements (FTAs), including EVFTA and UKVFTA. It has one of the strongest US dollar exchange rates in the region, surpassing Indonesia, Thailand, India, and Malaysia. There are also attractive investment policies and preferential tax arrangements. For example, certain investors pay 0% corporate income tax (CIT) for the first four years of operation and only pay 50% for the following five years.

Industrial Occupancy is High

Industrial real estate in Ha Noi and HCMC was almost fully occupied by September 2022. In Ha Noi, rent reached US$140/m²/one-off term and HCMC had rates of US$200/m²/one-off term. As these are some of the longest-established markets in the country, they have the highest rates.

Northern Viet Nam has seen changes in supply in 2022. Hai Phong overtook Bac Ninh as the largest industrial supplier after Deep C Hai Phong III launched. However, Bac Ninh has substantially more ready-built supply. With larger available land banks at more affordable prices, investors are increasingly interested in areas like Hung Yen and Hai Duong.

In Southern Viet Nam, Binh Duong was the largest supplier with more than 7,000 hectares. Long An and Ba Ria – Vung Tau had the greatest new supply, while HCMC, Binh Duong, and Dong Nai lacked new projects. Binh Duong was the superlative ready-built supplier.

With rising demand and high occupancy, the government has created strategies to increase industrial supply. In H1/2022, the Deputy Prime Minister approved nine new IPs with a total area of 2,472 ha and a total investment capital of VND 29.4 trillion. They are expected to be operational between the end of 2023 to 2025. The Ha Noi People’s Committee has signed a decision to build between two and five new IPs from 2021 to 2025 in Soc Son, Dong Anh, Bac Thuong Tin, Phu Nghia, and Phung Hiep.

Matthew Powell, Director of Savills Ha Noi, noted: “The lack of supply in major cities provides challenges and opportunities. High occupancy and prices reflect significant demand from local and foreign investors. It has created opportunities for both domestic and foreign developers to introduce new products to meet demand. We are also seeing a rise in quality with the entry of foreign players like YSL Group from Korea.”

Conclusion

If you are interested in the industrial market or need industrial property for your enterprise, contact, Savills Industrial Services. The team offers comprehensive consultancy services backed by the latest market research from across Viet Nam and the APAC region. Contact Thomas Rooney for more information.

Read more:

How to Unlock Lucrative Industrial Real Estate Opportunities in Viet Nam