Steady FDI growth drives industrial real estate in VN: Savills
Việt Nam has enjoyed growing foreign investment this year amid a stable economic environment, according to Savills’ Asia Pacific Investment Quarterly report for the third quarter of the year.
Việt Nam has enjoyed growing foreign investment this year amid a stable economic environment, according to Savills’ Asia Pacific Investment Quarterly report for the third quarter of the year.
Việt Nam’s economy is forecast to grow by 6.1 per cent in 2024, with inflation expected to reach 4.5 per cent, according to Troy Griffiths, deputy managing director of Savills Việt Nam.
Foreign direct investment increased by 7 per cent year-on-year, supporting industrial real estate, while international tourism and the retail sector show promising signs of recovery.
Steady annual growth in FDI is a key driver of industrial real estate in Việt Nam. The country currently offers 33,000 hectares of industrial parks for lease, with an occupancy rate of approximately 80 per cent.
Despite a projected slowdown in domestic spending, the retail market remains strong due to limited retail space and a growing middle class. AEON Mall is expanding, having opened AEON Mall Huế (8.6 ha) in September, acquiring a 10.5 ha site in Thanh Hóa Province for its largest mall in the central region, and securing the approval of the master plan of 1/500 scale for the AEON Mall Biên Hoà project (12 ha). Becamex IDC also broke ground on a 7ha commercial complex in Bình Dương New City.
In the hospitality sector, 191 projects are expected to add around 49,800 rooms by 2028. Around 75 per cent of this new supply is in the mid-range to high-end segment, with 70 per cent by international luxury hotel chains, positioning Việt Nam as a key market in the region.
Trần Thị Khánh Linh, associate director of investment advisory at Savills, said that the Vietnamese market continued to offer high growth opportunities, supported by steady FDI growth, robust infrastructure development, and consequently, strong demand across all segments such as residential, industrial, and commercial. These factors had collectively enhanced Việt Nam’s attractiveness to investors.
“With the recent enactment of real estate-related laws in August, investors are now more confident in a stable and transparent legal environment. The streamlined legal approval process and clear definition of initial investment costs (land use costs) have significantly boosted the appeal of real estate investment projects,” Linh said.
According to experts, investors currently have abundant opportunities to engage in mergers and acquisition (M&A) activities for promising projects or collaborate with local partners to develop large-scale ventures. The diverse market demand has attracted a wide array of investment preferences.
“Foreign investors continue to exhibit strong interest in residential real estate projects, on par with their demand for industrial parks and office buildings. Foreign investors consistently prioritise projects with clear legal status and readiness for development,” she said.
Specifically, most investors required projects to have the approval on the master plan of 1/500 scale, and many even demanded a notice of land use fee payment. However, legal approval processes recently slowed down due to ongoing changes in real estate-related laws, she said.
“As a result, the supply of residential projects has become quite limited. Foreign investors have thus shifted their focus towards industrial parks and office buildings, which are typically operational, have clear legal status, and are more readily available for M&A,” she added. — VNS
