Vietnam among outstanding countries for investors' expansion plans: JLL exec

Vietnam has the potential to attract investors from America, Europe, and Asia as the world looks back at its supply chains, said Tom Over, director of transportation and industrial at JLL Asia Pacific.

Industrial land in the south is more expensive than that in the north, with average respective prices of $160 and $130 per square meter, Over told an industrial real estate forum on Monday in Ho Chi Minh City.

Land funds in the country are still available, and multi-storey factories are attracting investors' attention, he added. JLL is a global real estate services firm.

Vu Van Chung, deputy general director of the Foreign Investment Agency, pointed out the many competitive advantages Vietnam has to attract FDI, including industrial real estate.

Firstly, Vietnam is politically stable, so investors can feel secure in investing long-term. Secondly, the country's economy is growing rapidly and has deep integration.

Thirdly, Vietnam has signed 16 free trade agreements, creating favorable conditions for international trade and exports. Vietnam's FDI growth is high, with a large contribution from the manufacturing and processing industry, including the semiconductor sector.

Chung said that Vietnam attracts not only China plus 1 investors, but also others from around the world.

Edwin Chee, chief operating officer of SLP Vienam, shared on the sidelines of the event that Vietnam's industrial property market is brimming with opportunities as companies seek to diversify their supply chains. "The country's strategic location, favorable trade agreements, and competitive labor costs make it an attractive destination for investment," he said.

However, this has also heightened competition among industrial property developers. To stand out, SLP leverages its deep industry knowledge, global best practices, know-how, and financial strength to offer customized solutions that cater to the unique needs of tenants, thereby attracting and retaining high-quality clients, Chee added.

Fierce price competition from neighboring countries

Chee also pointed out that the property market in 2024 faces key challenges. First, profitability is expected to decline due to high financing costs, which are driving up the capitalization rates of properties. Second, there is fierce price competition from neighboring countries like Thailand, where industrial land rental prices are often lower.

Additionally, high logistics, construction, and labor costs in Vietnam pose significant hurdles. Despite these challenges, there is optimism for long-term growth due to the country's strong economic fundamentals and substantial FDI, he noted.

Over also raised some concerns. In Southeast Asia, Vietnam, Thailand, and Malaysia are the countries chosen by many investors. Vietnam is considered the most cost-effective. However, many investors choose Malaysia because it has clear preferential policies for investors, in addition to construction permits.

Chung highlighted the story of competition in industrial park real estate prices, and the need to ensure competition to attract foreign investors.

Green industrial real estate trends

Hardy Diec, chief operating officer at KCN Vietnam, pointed out some trends that are gaining momentum among industrial real estate developers on the sidelines of the event.

Firstly, there's a notable rise in industrial projects seeking green building certifications like LEED (Leadership in Energy and Environmental Design) or LOTUS (Vietnamese standard). These certifications not only validate environmental performance but also enhance the project's marketability and appeal to tenants.

Secondly, industrial zones are incorporating renewable energy sources like solar and wind power to reduce their carbon footprints and operational costs. This aligns with Vietnam's broader commitment to renewable energy adoption.

Thirdly, developers are increasingly adopting circular economy principles, emphasizing waste reduction, resource recycling, and the use of sustainable materials. This approach not only minimizes environmental impacts but can also create new economic opportunities.

Fourthly, the integration of smart technologies, such as IoT sensors and data analytics, is optimizing energy management, water usage, and waste disposal within industrial parks, leading to significant resource savings.

Fifthly, the focus is on creating green spaces, implementing rainwater harvesting systems, and using permeable pavements to improve water management, reduce heat island effects, and enhance the overall environmental quality of industrial zones.