- News in Vietnam
- 16 March 2022
Why Vietnam industrial real estate remains remarkably “alluring” to foreign investors?
According to an expert, Vietnam’s industrial real estate market has been hailed as having positive signs of growth, becoming a prominent field attracting FDI capital to Vietnam. The reasons for this attractiveness are diverse.
The position Vietnam’s industrial real estate market compares favorably to that of neighboring countries within the region. Firstly, real estate prices are still relatively affordable when compared with other countries such as Malaysia, Thailand, China, or India.
“Although prices are on the upturn, we have seen many new projects being added to the future supply that will be a factor contributing to land price. For manufacturing enterprises (enterprise), labor force is the main culprit including work skills, working environment and social welfare. With plenty of job opportunities and career development, labor wage in Vietnam is relatively considerable in the region. Moreover, because the legal framework is fairly simple, businesses also feel comfortable investing and working in Vietnam”, said the expert.
Regarding the role of FDI enterprises in the industrial real estate market in Vietnam, the expert said that reputable enterprises choosing Vietnam as a strategic destination is of great significance in promoting the growth of foreign direct investment (FDI), and at the same time, increases Vietnam’s credit internationally.
Take Lego, it currently has only 5 manufacturing plants worldwide. Therefore, its choice of Vietnam as a destination to build a new factory is a great success in attracting FDI capital.
Besides large corporations, Vietnam also attracts FDI from companies operating in the field of production and logistics. In addition, the number of industrial projects investing in Vietnam is increasing, with the goal of prioritizing the development of data centers.
Sharing opinion on why the number of FDI enterprises participating in the industrial real estate market in Vietnam is gradually going up, the expert analyzed that there are many reasons for such attractiveness.
Specifically, industrial land in Vietnam has a relatively reasonable price with a lot of reputable real estate developers and appropriate legal policies. These are also the factors that help attract businesses to invest in Vietnam. In addition, other factors like residence, working-age population, labor costs, convenient transportation network, and accessibility to international ports and airports, in order to serve export-import finished products and commodities.
In addition to these favorable conditions, the right policy planning from the Central to the local level in Vietnam also holds great appeal. As a result, many new companies are entering the market due to tax incentives in key economic areas. Currently, businesses are trying to expand and diversify markets so as not to be dependent on China. In particular, Vietnam has emerged with political stability, open investment opportunities, meeting the needs of businesses related to legal factors and support from local authorities.
“Although administrative procedures still have certain limits, there have been many improvements. In general, there are many factors that “pull” investors to the Vietnamese market, instead of other locations like China, India or Thailand,” said the expert.
Also addressed by the expert, the epidemic has imposed hardships to investment as it is limited within the Internet. It is difficult for companies to make appropriate decisions. However, with the return of international flights on March 15, he expects foreign investment will soon blossom with plenty of new projects being signed, especially manufacturing and logistics factories and warehouse services in the coming months.