This real estate segment is expected to recover fastest from Covid-19
VietReader 31-08-2020, 12:26
Most segments of the Vietnamese real estate market are currently witnessing a large decline in transaction volume, forcing many real estate developers to change their plans and operations to overcome the difficult period. However, the industrial segment is experiencing positive changes, promising a fast recovery ahead.

Data from Real Capital Analytics shows that in Q2-2020 total office real estate transaction volume in Asia-Pacific were down 59% compared to the same period last year. For retail real estate, the decline is even more worrying: 68%! However, transaction volume in the industrial real estate and logistics segment only decreased by 24%, showing that this is a segment with high resilience in the Covid-19 pandemic.

Simon Smith, Head of Research and Consulting at Savills Asia-Pacific, said: “Industrial real estate is being noticed by many developers. The industry is closely related to big trends like the growth of e-commerce, and almost markets in the region lacks modern logistics space. Industrial real estate has been a resilient segment in most of the Asia-Pacific markets.”

This real estate segment is expected to recover fastest from Covid-19

During the Covid-19 era, the industrial segment is experiencing positive changes, promising a fast recovery ahead. 

In Vietnam, according to data from Focus Economics, Vietnam's index of industrial production (IIP) saw production in June 2020 increase 7.0% year-on-year, mainly due to the recovery in commodity production and electricity production. Industrial and manufacturing output is estimated to increase 271% this year and up 9.2% by 2021 indicating modest but promising growth in this sector.

In addition, the Purchasing Managers’ Index (PMI) also soared to 51.1 points in June, from 42.7 points in May, marking the first growth above the 50 point threshold since January, after the Vietnameses government's success in preventing the pandemic outbreak. This recovery is attributed to a sharp increase in new orders, strong purchasing activities and the highest increase in pre-production inventories since November 2018.

As of June 2020 the country has 336 industrial parks with a total area of about 97800 hectares. In which, 261 industrial zones are in operation and the remaining 75 are in the process of site clearance and construction. Occupancy reached 76% of the total operating industrial parks nationwide.

John Campbell, Head of Industrial Real Estate at Savills Vietnam, said: “With demand continuing to exceed supply, there is a need to increase the number of supply in key industrial sectors. The occupancy in key industria hubs such as Binh Duong, Dong Nai, Long An in the South, and Bac Ninh, Hung Yen, Hai Phong in the North has increased significantly since 2018 ”.

While nothing can guarantee the next year’s growth, it can be certain that Vietnamese industry is dependent on the supply chain shifts away from China, and many industrial real estate developers are preparing resources to capture the upcoming opportunities as soon as barriers are lifted.

(Theo ThanhnienViet)