Hanoi (VNA) – Vietnam’s industrial real estate market has been becominga magnet for foreign direct investment (FDI) enterprises thanks to robustgrowth of macro-economy.

Growing FDI coupled with a move up in the value chain has shaped a promisingfuture for Vietnamese industrial property, according to Troy Griffiths, deputymanaging director at property consultant Savills Vietnam.

“We see a lot of FDI into manufacturing from Japan, the Republic of Korea,Singapore, and Thailand”, he said.

The country secured up to 35.6 billion USD in FDI in 2017, a year-on-year surgeof 44.4 percent, with Japan the biggest contributor with 9.11 billion USD.Manufacturing and processing FDI made up 44.2 percent of the total.

The Vietnamese Government wants to move beyond a low-wage economy and istargeting growth in high-tech manufacturing, renewable energy, and smart cityprojects, he said.

In that context, the industrial property market will continue to be thriving;however, improvements in business climate should be put in place to lure moreforeign investors. Besides, skilled labourers serving the purpose of expandinglogistics and production sectors will ensure better productivity andcompetitive capacity in the years to come.

Real estate experts said that there was a radical change in the logisticssegment. Involvement of more foreign firms means a shift in approaching methodsin a more strategic manner. In addition, international third party logisticscompanies are becoming more active in Vietnam, and will drive demand for largermodern facilities.

The Government has invested heavily in the infrastructure; however, more worksneed to be done, said Griffiths.

Furthermore, the rise in e-commerce means that “last mile” fulfillment hassignificant potential, and demands will increase for well-located warehouses oncentral business district boundaries, and near major city arterial routes.

Warburg Pincus, which has announced a partnership with Vietnamese state-ownedbuilder Becamex IDC, is seen as one of the pioneers in the Vietnam’s logisticssector. The company will invest 200 million USD in BW Industrial DevelopmentJoint Stock Company to develop modern logistics facilities, and industrialproperty across the nation.

Jeffy Perlman, managing director, and head of the Southeast Asia of WarburgPincus, stressed that with the transformative shift of the manufacturing basefrom markets like China to Vietnam as well as with the rapid rise of domesticconsumption, the logistics and industrial real estate market in Vietnam is atan inflection point for outsized growth.-VNA