Green industrial real estate attracts FDI investment capital

Many industrial parks in Vietnam are being built and developed in the direction of green industrial parks, high technology, and sustainable development, creating motivation to attract investment. Photo: VSIP

Maintain attractiveness

According to records, in the first months of 2023, despite facing many global challenges as well as some internal difficulties, FDI investment capital in the industrial real estate sector still recorded an increase. .

Ms. Trang Le, Senior Director of Research and Consulting, JLL Vietnam, said that the industrial real estate market in Vietnam is very dynamic and potential. Nowhere is there as much participation from large investors as in Vietnam. There are currently more than 15 investors participating in industrial real estate investment development while in other countries there are only about 5-6 investors. This shows that the growth of industrial real estate in Vietnam is clear.

Citing statistical data from the Foreign Investment Department, Ministry of Planning and Investment, it also shows that, by the end of July 2023, FDI capital invested in Vietnam reached USD 13.43 billion, of which, The real estate sector attracted USD 1.53 billion, holding the 3rd position among industries and fields. Typically, in February 2023, Nghe An province awarded the investment policy for VSIP Nghe An 2 Project, investment capital of USD 150 million and on August 1, Nghe An Provincial People's Committee awarded the registration certificate of Investing in aluminum alloy production project for Innovation Precision Co., Ltd. (part of Shandong Innovation Metal Techonology Group) with a total investment of USD 165 million. According to the plan, in August 2023, the project will start building the factory and by October 2024 it will be completed and put into operation.

Along with that, according to experts, the trend of FDI capital into Vietnam is shifting from investors. Mr. Do Van Su, Deputy Director of the Foreign Investment Department, Ministry of Planning and Investment, said that besides traditional investors such as Japan, Korea, China, Taiwan, Vietnam is welcoming more capital from Western European countries such as Germany, the Netherlands, France, and Spain. North American investors are also more present.

According to Mr. Do Van Su, this capital flow is especially focused on the renewable energy industry. Recently, the American Semiconductor Industry Association with 32 members, the largest businesses, came to Vietnam to explore the environment and location for shifting chip and semiconductor production.

Increase capital in green industrial real estate

Sharing about the prospect of new capital flows investing in industrial real estate, especially the need for green real estate, General Director of DEEP C Industrial Park Complex Bruno Jaspaert said that Vietnam is gaining a large number of houses. Investment has increased steadily over the years and if it continues as it is now, there will be no limit  to taking advantage of opportunities from new capital flows. In particular, the demand for green industrial real estate and sustainable development from foreign investors in Vietnam is forecast to increase. Secondary investors are increasingly interested in sustainable development and the use of renewable energy due to the introduction of carbon taxes.

Ms. Trang Le, Senior Director of Research and Consulting, JLL Vietnam, said that currently, Vietnam has factories and warehouses with the same quality as other countries in the region; even Projects also integrate green features. A very interesting index of real estate projects that have applied green development criteria, in which industrial and manufacturing real estate is the segment applying the highest green criteria. From there, we can see the positive influence in the participation of foreign FDI capital flows from bringing the need for green development to improving the quality of industrial real estate in recent times.

Although the opportunity for Vietnam to welcome shifting investment flows is huge, challenges are not absent. In early July 2023, when announcing the Business Confidence Index (BCI) for the second quarter of 2023, the European Business Association in Vietnam (EuroCham) pointed out a series of problems facing European investors in Vietnam. These are the lack of electricity, the "inadequacy" of infrastructure and barriers related to unclear regulations and cumbersome administrative procedures...

Accordingly, to attract high-quality FDI capital flows into Vietnam in the real estate sector, Mr. Paul Tonkes, Deputy Managing Director of industrial real estate, Indochina Kajima Development Company (ICCK) suggested that Vietnam Nam should have a system for rating and certifying industrial parks, similar to the Eco-Industrial Parks (EIP) framework or LEED certification. Thanks to that, tenants can know exactly the quality of products and to what extent they can contribute to reducing carbon in the supply chain.

At the same time, this ranking and certification will also help industrial real estate developers have more motivation and responsibility to build a healthy supply chain ecosystem without obstacles in industry symbiosis. This will help create and maintain the attractiveness of Vietnam's industrial real estate market.

“Large corporations have high environmental requirements. They need to provide clean, sustainable energy so that their products meet green standards and are certified for export to the most demanding markets. Therefore, they also require Vietnam to have industrial parks that meet these requirements. Therefore, to attract high-class investors, Vietnam must soon build green industrial parks, said Mr. Do Van Su, Deputy Director of the Foreign Investment Department, Ministry of Planning and Investment.