CapitaLand's Ambitions in Vietnam

According to Nikkei Asia, CapitaLand Investment, a Singapore-listed real estate management business, intends to invest up to USD 110 million in Vietnam to develop or purchase industrial units, anticipating demand from manufacturers shifting supply chains out of China.

Patricia Goh, CapitaLand Investment's Managing Director for Southeast Asia, told Nikkei Asia that the company, which is backed by Temasek Holdings, plans to add Vietnam-based assets worth SGD 100 million to SGD 150 million (USD 73 million to USD 110 million) to its portfolio over the next two years.

In addition to Vietnam, this corporation intends to invest in Malaysia and Thailand, with the goal of accelerating ASEAN's industrialization.

In actuality, Southeast Asia has emerged as a main target for companies seeking to diversify supply chains in order to overcome the US-China trade war and poor economic prospects.

"If we think of corporations wishing to leave China," Goh told Nikkei Asia, "the obvious attitude would be Vietnam, particularly Northern Vietnam. Thailand is also a popular location for certain investors.

The CapitaLand CEO also stated that Chinese textile businesses are looking at Vietnam as a production location, while electronics manufacturers from South Korea are also exploring production in Vietnam.

In anticipation of this move, Patricia Goh stated that CapitaLand Investment is exploring for property in Vietnam to establish new factories or to absorb existing industrial infrastructure into its portfolio. The goal is to own the facilities and lease them to manufacturers.

"There is no land bank in Vietnam right now," she explained. "But we are currently negotiating with various industrial park owners to potentially buy, and we have identified places where we want to establish our presence."

Goh also stated that CapitaLand Investment is in "advanced" discussions with Chinese manufacturers to develop new factories in Vietnam in order to secure possible tenants for future assets in Vietnam.

According to the company, they already have a large network of potential clients from the Chinese market. In China, where they own and manage six logistics companies and 11 industrial parks, the company stated they have over 7,000 tenants and customers.

The investment plans come as the company faces challenges in China. The company's net profit fell 79% last year to SGD 181 million, mainly due to property losses in China from declining rental prices.

As of the end of March, CapitaLand Investment managed SGD 134 billion worth of assets, with China accounting for 34% and Southeast Asia accounting for 41%. Goh said the company has no specific plans regarding the proportion of ASEAN assets it holds but is emphasizing pursuing short-term growth in the region.

CapitaLand has been in Vietnam since 1994, starting with service and commercial housing projects before venturing into residential development in 2007 with The Vista in Ho Chi Minh City. Today, CapitaLand Development's portfolio in Vietnam includes a retail center, a SOHO project, two mixed-use projects, and about 16,000 quality homes across 17 residential projects in Hanoi, Ho Chi Minh City, and Binh Duong Province.

2024 also marks the group's 30th anniversary of successful operations in Vietnam, with the company aiming to expand its residential portfolio in Vietnam to 27,000 units by 2028.