Industrial real estate developers ready to seize opportunities from Vietnam’seconomic rebound in 2024

Vietnam had attracted over $20 billion in FDI this year as of September 20, 2023, a 7.7 per cent increase year-on-year, according to the Foreign Investment Agency at the Ministry of Planning and Investment.

In addition to industry titans such as Samsung and LG, other international manufacturers continue to flock to Vietnam. In September, Apple finalized the relocation of eleven of its audio device production facilities to Vietnam, marking a significant shift in the company’s global supply chain strategy.

Experts from the Ho Chi Minh City-based private equity investment firm VinaCapital have forecast that Vietnam’s GDP growth will rebound to 6.5 per cent next year, driven by a recovery in exports, which will in turn be closely accompanied by a rebound in local manufacturing output. In addition, the Comprehensive Strategic Partnership set up recently between Vietnam and the US signifies an important turning point, which will usher in a new period of development for Vietnam.

Against a backdrop of bright prospects, industrial real estate developers are preparing to expand their land banks to seize the opportunities from Vietnam’s economic rebound in 2024. There has been a recent surge in supply of industrial parks in both the north and the south. According to CBRE, three new industrial parks totaling 528 ha in northern Bac Ninh and Hai Duong provinces went into operation in the first quarter of this year.

In addition, two projects - the VSIP 3 Industrial Park and the Nam Tan Uyen 3 Industrial Park - on more than 1,300 ha in the south are expected to hit the market. A total of 5,400 ha of industrial park land, located primarily in the Mekong Delta’s Long An province (40 per cent) and southern Binh Duong province (27 per cent), is planned to be released in the near future, a CBRE report states.

As Vietnam’s leading for-rent logistics and industrial real estate platform, the BW Industrial Development JSC (BW) is well-poised for further growth next year with the launch of ten new projects nationwide in 2023. These projects aim to meet the growing demand for ready-built factories and warehouses among domestic and foreign investors eyeing Vietnam’s logistics and industrial sectors.

The ten projects, covering a total gross floor area (GFA) of 1 million sq m and strategically located in regions with excellent connectivity and infrastructure, including Hai Phong and Quang Ninh in the north and Ho Chi Minh City, Binh Duong, and Dong Nai in the south, are testament to BW’s unwavering commitment to help Vietnam become a vital link in the global supply chain.

With a deep understanding of the needs of modern tenants, BW focuses on ready-built warehouses and factories that offer investors flexibility, speed to market, and lower Capex and time commitments. As a result, its projects have garnered numerous inquiries from potential tenants and recorded high occupancy rates.

While industrial parks nationwide have reported occupancy of over 80 per cent, with key northern provinces reaching 83 per cent and key southern provinces 91 per cent, according to the latest Savills report, BW had achieved and maintained remarkable average occupancy of 93 per cent among its stable projects as of September.

The ten major projects, which form part of BW’s growth plan for 2023 and beyond, demonstrate its long-term goal of “staying atop market developments and getting ahead of trends”. The plan is strongly backed by international investors, with BW having secured an impressive $300 million or so from international investors in the first quarter of 2023 alone.

The combination of a sizable land bank and an extensive footprint ideally positions BW as a leader in the industry. It currently has over 8.5 million sq m of industrial land in prime locations under its control across 40 projects in eleven key provinces in Vietnam, with over 3 million sq m of GFA of completed or under-construction properties. With $2 billion of gross assets under management, BW is currently pioneering and operating Vietnam’s first and largest e-commerce and last-mile delivery logistics cluster, Tan Phu Trung, in Ho Chi Minh City, with several others in the development pipeline across Vietnam’s two key gateway cities.

Mr. Lance Li, CEO of BW, is bullish about Vietnam’s economic outlook and the potential of its industrial real estate sector. He commented that with the foresight to capture Vietnam’s economic rebound by the second quarter of 2024, BW has launched multiple projects this year that will meet the increasing demand of international manufacturers. Vietnam has been experiencing steady and stable growth, and strong fundamentals relating to workforce, location, FTAs, and economic orientation continuing to be its most significant assets for long-term growth.

“As Vietnam’s largest developer of for-rent logistics and industrial properties, BW will continue to maintain its leading market position through organic development and by acquiring high-quality assets and well-situated land parcels,” he said.