Vietnam holds positive outlook for 2024: Savills exec

Vietnam’s economy is looking bright this year, driven by robust foreign investment, particularly in high-tech industries, an executive from property service firm Savills Vietnam has said.

“Vietnam's economic outlook for 2024 is positive, with forecast GDP growth of 5.5% to 6.5%, placing the country among the top 20 fastest-growing economies globally,” Troy Griffiths, deputy managing director of Savills Vietnam, said in a note released Thursday.

The Asian Development Bank, International Monetary Fund and World Bank, have projected Vietnam’s GDP growth at 5.5%-6.5% this year. According to the IMF, Vietnam is forecast to become one of the fastest-growing economies in the world in 2024, joining peers such as Macao, India, and the Philippines.

The country’s Q1 GDP expanded 5.66% year-on-year, higher than the growth rate posted in the first quarters of the 2020-2023 period. Registered foreign direct investment (FDI) in Q1 was $6.17 billion, up 13.4% year-on-year. Of the figure, newly registered FDI climbed 57.9% to $4.77 billion.

FDI inflow has continued to improve since then. FDI commitments in January-May went up 2% year-on-year to $11.07 billion, government data showed. Of the total, $7.94 billion was pledged for 1,227 newly-registered projects, up 50.8% and 27.5% year-on-year, respectively.

FDI inflows reflect robust growth, with newly registered FDI increasing strongly, “highlighting sound investor confidence and a vibrant industrial sector”, Griffiths emphasized.

He noted that semiconductor chips will likely draw in notable investment in 2024, and Vietnam will benefit from the U.S. Science and CHIPS Act, which includes $500 million for improving semiconductor training, cybersecurity, and business climates globally.

Lam Research, a leading U.S. semiconductor manufacturer, plans to develop a factory with an investment of $1-$2 billion in the Southeast Asian country.

In the industrial sector, Gelex Group and Frasers Property are collaborating to create industrial parks which adhere to LEED standards. They recently started the Industrial Center Yen My Project in the northern province of Hung Yen, which will offer 159,000 square meters of versatile industrial facilities. Additionally, their Industrial Center Dong Mai in Quang Ninh province involves a 71,000 sq m ready-built factory, set to be completed by Q4/2024.

Becamex IDC Corp recently signed an investment agreement with and Sembcorp Development Vietnam Co., Ltd. to develop an industrial park in Binh Thuan province which covers 5,000 ha and has a total investment of $817.4 million.

Vietnam’s tourism industry is recovering, with Asia-Pacific tourist numbers expected to return to 2019 levels by 2025. Vietnam is seeing a rise in its popularity as a wedding destination venue, particularly from India.

Several hospitality real estate projects resumed construction in Q1, including the Flex Home Apartment development (within the Libera Nha Trang project) by Masterise Homes and KDI Holdings with 300 condotels. Q1/2024 saw the launch of new residential developments, including the 877-ha mega project Vinhomes Royal Island in Hai Phong and Gamuda Land’s 3.7-ha Eaton Park Ho Chi Minh City.

Social housing has been prioritized and the government is supporting development with an updated legal framework and favorable interest rates.

Currently, 129 projects with a combined 114,934 social housing units are under construction. Many investors plan to deploy social housing projects, which can be lucrative if the right economies of scale are achieved.

Strong demand from foreign manufacturing and IT enterprises will continue to support office performance in Hanoi and Ho Chi Minh City. By the end of 2026, Grade A and B office supply in Ho Chi Minh City is forecast to rise by 200,000 sq m, an increase of 20% compared to current stock. Hanoi is expected to welcome an additional 220,000 sq m, an increase of 13%.