Vietnam’s industrial real estate is emerging as a viable investment opportunity in the global market. Every economic sector has suffered recently. However, when combined with the heat from the US-China trade war, Chinese firms are looking to shift production to Southeast Asian countries to avoid the effects of this dispute. Vietnam is regarded as the most promising investment location in Southeast Asia as many international companies are now investing in Vietnam. Savills Industrials Vietnam, the leading industrial real estate agency in Vietnam, will provide you with all of the necessary information to make investment decisions.
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The State of Industrial Real Estate in Vietnam
Vietnam’s transition from an agrarian economy to one of Asia’s leading industrial centers, while also changing low-wage sectors into high-value and intensive sectors, has positioned itself as the leader in South East Asia for foreign direct investment.
The industrial and real estate industries are projected to rebound quickly from the economic depression caused by the outbreak. The rise of the e-commerce market will be a major stimulant element because of the necessary logistics required.
Despite the limits on mobility, investors are still extremely interested in commercial real estate, and they are also looking into investment alternatives such as debt, steady income assets, and industrial property.
Opportunities in the Industrial Real Estate Industry
According to the Vietnam Association of Realtors, in 2021, the movement of production and installation of products from other countries will continue to be transferred to Vietnam, increasing the demand for local industrial real estate.
As a result, several new industrial parks continue to enter the Vietnamese industrial real estate market. Many new projects for industrial park infrastructure developments are being authorized.
Warehouse and factory leasing prices are not predicted to rise in 2021 compared to 2020. This forecast has reduced the potential risk of FDI in the country.
However, the advice is that municipalities exercise caution when approving new industrial developments to prevent a surplus situation, as has occurred in several municipalities.
Buyers and investors in the north are paying considerably greater attention to the six northern provinces of Quang Ninh, Hai Phong, Bac Ninh, Hoa Binh, Hung Yen, and Vinh Phuc.
Binh Duong, Dong Nai, Ba Ria-Vung Tau, Long An, Binh Phuoc, Can Tho, and Kien Giang are the most heavily desired cities and provinces in the south for the same investors.
Real estate developers seem to be relocating to the city’s outskirts, where greater land funds are still available and also being close to the larger labour market.
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Despite the optimistic outlook, there are still challenges ahead
According to John Campbell, Manager of Savills’ Industrial Services – Vietnam’s leading industrial real estate agency, research data from a study of industrial real estate rental prices in 54 markets across 21 countries reveals that, in addition to rental prices, service charges often account for around 19% of total warehouse leasing expenses.
With big populations and a limited supply of warehouses, the world’s major cities often have the highest industrial real estate leasing rates, despite significant demand from consumers and enterprises.
The cost of renting a warehouse in Ho Chi Minh City is around $8/square foot/year. The entire cost of storage, taxes and services is around $9.8 per square foot per year. This is on par with Berlin, Hamburg (Germany), and Marseille (France).
The industrial real estate agency, Savills Industrial, says one of the most critical aspects of warehouse operations is labour costs, which account for more than half of overall operating expenses.
The cost of power and gasoline for construction and shipping is also a significant element in warehouse operations. Cheap labour and energy costs have enabled Vietnam to become the country with the lowest operating expenses in the world. Also, huge corporate tax exemptions and reductions are provided to participate in the field.
Qualities of a Great Industrial Real Estate Agency in Vietnam
The industrial real estate agent serves as an analyst, a business manager, a consultant, a negotiator, and a marketer at various stages of the process, to mention a few.
Below are a few qualities that make up a good industrial real estate agency.
1) Diverse Skill Sets
Agencies are all about people. A great industrial real estate agent will need a diverse range of skillsets for its staff, including strategists, account managers, and so on. It is critical to have the correct mix of talents in an agency to meet the client’s life cycle to bring success.
2) Experience
Make sure the agent you pick has expertise assisting renters in the search for industrial real estate fields. Savills Industrial Vietnam – a leading industrial real estate agency – has already made a reputation for itself, having created a full-service platform for industrial real estate in 2017 as a result of significant expansion in the manufacturing and logistics sectors.
3) Efficiency
The most important component of an industrial real estate agency is constantly working. The most essential thing you should acquire from a real estate agency is a prioritized list of activities that you can implement, not paperwork, audits, and analysis. These are vital for demonstrating that you have the appropriate approach.
Full-service manufacturing and logistics industrial real estate consultation is provided by industry experts with deep market knowledge and experience. Savills Industrial, a leading industrial real estate agency, assists clients with market entry, planning and development, leasing, investment, valuation, transactions, and disposal.
When considering entering the market for the first time or diversifying or expanding your activities, go to Savills Industrial Services Department and experience their great industry expertise and skills to make it happen.
