China Plus One model strongly impacts Vietnam's most attractive real estate segment
VietReader 30-11-2020, 14:39
Vietnam's industrial real estate is considered the fastest-growing segment at present and in the future. This segment has been benefiting from FDI inflows and the China Plus One model.

Industrial real estate is considered the fastest-growing segment of the insdustry.

A report of the Ministry of Planning and Investment revealed, in the first 9 months of 2020, total volume of registered FDI inflow reached $21.2 billion, with 1,947 newly registered projects, with a total capital value of $10.36 billion. Southern province of Bac Lieu led the country with18.86%, thanks to Singapore's LNG Power Plant project worth $ 4 billion. Other leading markets included: HCMC with 15.34%, Hanoi 13.78% and Ba Ria - Vung Tau 10.13%. Investment from Singapore reached $6.76 billion, accounting for 31.91% of total registered FDI, followed by South Korea $3.16 billion, equivalent to 14.94%; and China with $1.87 billion, or 8.85%. The Northern region took the lead in newly registered FDI for the manufacturing industry in Jan-Sep, reaching $2.88 billion, equivalent to more than 61.13% of the total newly registered capital.

In the first half of 2020, industrial zones (IZs) and economic zones (EZs) have directly attracted about 335 FDI projects, with total new registered capital of about $6 billion.

Notably, many foreign investors have been interested in new emerging markets like Tay Ninh, Vinh Long. John Campbell, Head of Industrial Real Estate at Savills Vietnam said that this can be seen as a natural development when manufacturers start to look at other industrial provinces. In fact, the vacant land plots in the major areas in the North like Bac Ninh, Hung Yen and the South like Binh Duong, Dong Nai are gradually becoming scarce.

In addition to benefiting from FDI inflows, the Vietnam’s industrial real estate segment is also receiving many advantages from Free Trade Agreements and the trend of relocating factories, investment flows from China to Southeast Asian countries. The prolonged Covid-19 pandemic is even predicted to accelerate the relocation of multinational companies' production facilities out of China. Notably, giants like Apple Computers, Pegatron and Foxconn have announced plans to move to or expand production in Vietnam.

Troy Griffiths, Deputy General Director of Savills Vietnam said: “The China + 1 model is likely to be increasingly pursued by manufacturers in order to reduce risks and diversify production locations, leading to a greater demand for Vietnam's industrial real estate market. With increasing demand and capital market activities, industrial real estatesegment will continue to be the “sweetheart” of the real estate industry in general. The pursuit to own industrial property in key economic zones is certainly a trend in the future. "


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