Industrial real estate - "Magnet" attracting foreign capital

Many financially strong investors have seized the opportunity to create clean land funds to anticipate the growth cycle of industrial real estate. Illustration photo: H.Anh

Bustling mergers and acquisitions (M&A)

With outstanding advantages such as: stable macro economy, good inflation control, positive and impressive economic growth in a difficult context; improved investment and business environment in Vietnam..., the confidence of FDI investors in Vietnam is continuing to be strengthened. It is forecasted that in the coming time, FDI capital flows into Vietnam will continue to increase, leading to positive growth in demand for industrial real estate. This is an opportunity for investing in industrial park infrastructure to accelerate development in the coming time.

According to the report of the Ministry of Planning and Investment, large projects in the fields of semiconductors, energy, component manufacturing, electronic products, and high value-added products tend to increase. In particular, recently, Vietnam has become the center of attention of the semiconductor industry supply chain. Many large corporations in the fields of semiconductors and AI such as Amkor, NVIDIA, Hana Micron… are interested in new investments and expansion investments in Vietnam.

It can be said that recently, many financially strong investors have quickly seized the opportunity, M&A to create clean land funds to wait in front for the new growth cycle of the real estate market.

According to data from the Vietnam Association of Real Estate Brokers (VARS), in the first 6 months of 2024, M&A deals in the real estate sector in general and industrial real estate in particular are being promoted with increasing frequency and scale, with the participation of financially strong enterprises inside and outside the industry, domestic and international. In particular, industrial real estate near highways, border gates, seaports, airports… continues to attract the attention of investors.

Ms. Trang Bui, General Director of Cushman & Wakefield Vietnam, said that from the end of 2023 to the first half of 2024, many notable real estate M&A deals had been recorded, mainly from investors in Malaysia, Taiwan (China), China, Japan, Singapore, Korea... The goal of foreign investors was to find clean land funds, good quality, real value as well as complete legal documents, with much development potential.

Typically, investor Nishi Nippon Railroad (Japan) has acquired 25% of shares in the 45.5-hectare Paragon Dai Phuoc Project from Nam Long Group (Vietnam) for about US$ 26 million. CapitaLand Investment plans to invest an additional US$ 73-110 million in Vietnam in the next 2 years to build or acquire industrial parks. Or Tripod Technology Corporation has acquired an 18-hectare land in Chau Duc Industrial Park (Ba Ria - Vung Tau) from Sonadezi Chau Duc. With an investment capital of US$ 250 million, the Electronic Tripod Vietnam factory contributes to realizing the expansion and development plan of the high-tech electronics industry of Tripod Technology Corporation

Commenting on the outlook of Mr. Troy Griffiths, Deputy CEO of Savills, the industrial real estate sector would witness stable demand, supported by FDI inflows and infrastructure development. Accordingly, M&A deals in this sector are expected to be vibrant again.

Experts in the real estate sector also expect that the three laws related to the real estate market, including the Land Law 2024, the Housing Law 2023 and the Real Estate Business Law 2023 taking effect from August 1, 2024 will help purify and orient the market to develop more healthily, thereby making M&A activities more vibrant.

Removing barriers, welcoming a new wave of investment

Lawyer Nguyen Truc Hien, member of Vietnam International Law Firm (VILAF), the Land Law 2024 also adds many benefits for foreign investors. The new and more open regulations are a premise for the Vietnamese real estate market to welcome a wave of foreign M&A.

However, in reality, attracting FDI investment into industrial real estate still has many barriers, especially legal barriers that prevent M&A activities from breaking through.

In addition, in the context of green growth, many experts believe that sustainable development is becoming a trend of choice for many countries in the world. Pressure from market and partner requirements for sustainable development is increasing, greening industrial parks and economic zones to welcome green investment capital is a mandatory requirement.

Mr. Tran Thien Long, Permanent Vice President of the Vietnam Industrial Real Estate Association, said that the mandatory trend for industrial parks and manufacturing plants was to move towards green transformation and sustainable development to meet the common international needs and regulations in exporting goods, especially to demanding markets. However, the common situation that industrial parks were facing was environmental pollution, especially wastewater and exhaust gas pollution. With this problem, we must invest in treatment technology and promote the use of renewable energy in industrial parks and economic zones. Along with a lack of infrastructure, we must promote traffic and technical infrastructure.

Faced with the above barriers and challenges, many experts believe that it is necessary to complete legal documents guiding the reuse of raw materials and waste, promote the circular economy in industrial parks, and promote the mobilization of resources from international organizations, business associations, climate finance funds, energy transition partners as well as commercial banks and green financial institutions. In addition, it is necessary to add more financial incentives to encourage enterprises to convert and build new ecological industrial parks.

In addition, attracting selective investment, proactively contacting and closely following the world's leading corporations in the industries and fields that Vietnam needs to prioritize. In particular, developing production, industry and services on the principle of saving and effectively using land resources, associated with linking regional development, forming industry clusters; economic development must attach in hand with social infrastructure development; ensuring environmental sustainability; planning and implementing solutions to build housing and service works, public utilities for workers in industrial parks...