According to the latest report by real estate consultancy, Jones Lang LaSalle (JLL) Vietnam, investors are looking for industrial and logistics assets that they can acquire directly or through joint ventures with local industrial developers and land owners.
There is also the potential for a variety of Merger & Acquisition (M&A) opportunities as companies shift manufacturing away from China to Southeast Asia. Vietnam is on the radar of many companies considering relocation of facilities and will receive its fair share of new investments across the region.
A potential negative in industrial growth is the lack of consistent standards and specifications for modern logistics and warehouse space which has caused some confusion as to whether investments should be made related to current operations, or whether investment should be focused on upgrading facilities. However under either scenario Vietnam’s industrial and logistics markets should improve overall.
In order to determine whether investments can generate adequate rates of return, the deal size, the land tenure, opportunities for rental growth and the quality of assets are among the factors that investors need to consider.
Nguyen Thi Van Khanh, Senior Director, Capital Markets at JLL Vietnam said, “We expect foreign investors to continue showing keen interest and strong commitment in Vietnamese real estate market, and the market has the potential for growth.”
JLL”s report also notes that land in the central business districts (CBDs) of Hanoi, Ho Chi Minh City and Da Nang is increasingly difficult to find since most areas are already under commercial or residential development, so investors will need to look for opportunities in areas outside of the CBDs or in neighboring provinces.
On a long-term basis, the government’s existing policies related to commercial, industrial and residential land use are expected to lead to increases in real estate market transparency so that the country can remain competitive with other countries in the Southeast Asia market.
As developers and investors review the government policies, new investment is expected to increase in 2020 and beyond. Since the U.S.-China trade war has grown increasingly harsh throughout this summer, and prospects for a trade agreement appear to be increasingly difficult, this can also lead to increases in investments not covered under normal growth scenarios.