Nascent industrial property market makes Vietnam attractive to investors. (Photo: VNA)Hanoi (VNA) – The industrial property market in Vietnam,including industrial land, ready-built factories, warehouses and otherlogistics properties, is in the nascent stage of development, making thecountry an attractive destination for investors, reported US-based commercialreal estate brokerage firm Jones Lang LaSalle (JLL).
Mentioning features of the industrial property market, the firm said “Industrial parks and other industrial propertiesthat are competing with each other mainly on location, rather than on standardsof infrastructure, buildings and services.”
Industrial parks and otherindustrial properties are mostly sparse and major industries are not gatheredfor development on a regional basis. Major occupiers are predominantly fromlabour-intensive industries, including textiles and wearing apparel, foodproducts, wood products and furniture, and rubber and plastics products and thecontribution of the value-added sector is still insignificant, it added.
The JLL outlined several notable advantages that make Vietnamattractive to industrial investors. Vietnam's geographicallocation with access to the world's major seaborne trade routes, has offeredthe country huge opportunities to develop maritime transport, particularly forlogistics services.
In addition, the country's close proximity to Chinamakes it a worthy option for manufacturers looking at alternative locations inSoutheast Asia because the operating cost in China has been continuouslyincreasing in recent years.
The key drivers of Vietnam's economic growth can beattributed to urbanisation; foreign direct investment; growth in themanufacturing sector; and growth in the middle-income population. These factorshave created a spillover effect, driving the country's demand for internationaltransport and logistics services.
As the domestic economy shifts from agriculture tomanufacturing and services, household income is likely to increase. Accordingto the Brookings Institute, Vietnam is expected to enjoy the strongest growthin the middle-income population bracket, with a Compounded Annual Growth Rate(CAGR) of 19 percent from 2018-2020, and an increase of 14 percent from theprevious decade.
The General Statistics Office shows that Vietnam isexperiencing a "golden population structure". The average working agein Vietnam ranges from 20 to 50 with a median age of around 30. A youngpopulation coupled with growth in average income will support purchasing powerand help the country remain an attractive destination for investors, thecompany explained.
Vietnam’s variety of tax incentives and low labour costs are anotherfactors making Vietnam more appealing to foreign manufacturers,their associated suppliers and supporting industries.
In comparison to itsregional peers, the Vietnam market is still comparatively young. However, asthe country steadily approaches the growth stage of its industrial marketevolution, specific areas of opportunity are beginning to emerge as it developsan intermediate product and value-added offering.
Shifting from more labour-intensive to more capital-intensive and automatedresources, the JLL anticipates that the typology of the industrial offeringwill steadily become more sophisticated as occupier requirements develop andindustrial market demand moves from its current low specifications to higherspecifications needs.
A significant area of land is planned for industrial development until 2020,nearly double the current market size. Thus, huge opportunities exist inVietnam for both existing players and potential new market entrants to accesspotential land banks and capture market share, the brokerage firm said.-VNA
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