by Savills Research 28/12/2023, 11:21

What is driving real estate development In Hai Phong?

In the dynamic landscape of Vietnamese industry, Hai Phong emerges as a pivotal player, driven by strategic investments, foreign direct investment (FDI), and a steadfast commitment to robust infrastructure.

Hai Phong’s strategic development approach has bolstered the city's economic vitality and positioned it as a beacon for prospective investors and businesses alike. In this blog, we review the factors driving property investment opportunities in Hai Phong and the elements that set the stage for future growth.

Macroeconomic and demographic overview

Hai Phong's economic vigour is evident through solid GRDP and economic performance, notable FDI inflows, and a dynamic demographic landscape. These aspects underpin the city’s industrial strength and highlight the investment potential in Hai Phong.

In 2022, the population in Hai Phong reached 2.1 million; of which, the labour force totalled 1.04 million, both increasing by 1% year-on-year (YoY).

In H1/2023, Hai Phong gross regional domestic product (GRDP) increased by 9.9% YoY; it placed third in the nation and first in the Red River Delta. In 2022, Hai Phong delivered 3.9% of the national GDP, but by 2025, Hai Phong is set to have a 6.4% share.

GDP Hai Phong at current prices

In H1/2023, Hai Phong attracted foreign direct investment (FDI) of US$1.98 billion, up by 80% YoY. Hai Phong is home to significant FDI projects, and, by June 2023, there were 480 FDI projects in industrial parks and economic zones in Hai Phong with investment totalling US$24.85 billion.

Notable investors in Hai Phong include LG (Korea), Bridgestone (Japan), Regina Miracle (Hong Kong) and Pegatron (Taiwan). LG Group is a significant investor in Hai Phong and has invested US$7.24 billion into the port city. Projects include LG Electronics, LG Display, and LG Innotek. In June 2023, the Hai Phong authority approved an additional investment of US$1 billion for LG Innotek between 2023 and 2025, which will bring its total investment to more than US$2 billion. LG Innotek is in Trang Due Industrial Park (IP), and when its V3 plant starts production, it is forecast to create more than 2,500 jobs and contribute approximately US$4.3 million to the annual State budget. 

On the Provincial Competitiveness Index (PCI), in 2022, Hai Phong ranked third in Viet Nam after Quang Ninh and Bac Giang. It had notable improvements in five of ten subindices. The city’s prominent PCI performance and continuously high score are indicative of the significant investment potential in Hai Phong and the potential for future investment and business opportunities.

Rising FDI and investment projects in Hai Phong will generate residential demand, which could be interesting for developers interested in affordable housing or even serviced apartments. Of course, growing populations need goods and services, which could support logistics investment in Hai Phong, retail development, and other business opportunities.

Infrastructure projects in hai phong

Active infrastructure investment in Hai Phong supports its competitive appeal, industrial strength, and potential for future real estate development. Hai Phong benefits from a strategic geographic location with notable seaport projects like Lach Huyen International Port. It also hasd road, rail, waterway, and air connectivity, which support regional, interprovincial, and international connectivity.

In 2023, Hai Phong will invest more than VND 22 trillion (US$929 million) in infrastructure development. In Q4/2023, the Hai Phong airport will start its upgrade project, Cat Bi International Airport Terminal 2. By 2025, the airport will serve 8.5 million passengers per annum (pa).

Other key infrastructure projects in Hai Phong include the Hai Phong - Thai Binh coastal road and the Lach Huyen International Port expansion. Ben Rung Bridge is 50% completed and Xuan Cau Industrial Park and Non-Tariff Zone began construction in Q2/2023 and will be completed by 2033.

Secure links with domestic and international markets are a significant FDI pull factor in Hai Phong. Comprehensive infrastructure systems support traditional manufacturing but also create interesting industrial investment opportunities in fields like logistics or ready-built factory and warehouse development.

Key infrastructure projects in Hai Phong

Hai Phong industrial performance

Industrial development is the linchpin of Hai Phong's economic dynamism, underpinning growth and, job creation, and bolstering its position as a key player in the national economic landscape. By H1/2023, Hai Phong’s industrial market comprised 2,634 ha NLA of land across 12 industrial parks, and the index of industrial production (IIP) increased by over 12% YoY. Notable industrial parks include VSIP Hai Phong and Nam Cau Kien.

Dinh Vu – Cat Hai economic zone offers appealing investment incentives in Hai Phong such as import and export tax exemptions for goods and corporate income tax exemptions and reductions.

The city supports industrial development and expansion and is committed to the advantages the industrial sector presents to current and future growth. The Hai Phong authorities are increasing industrial land funds, and between 2023 and 2025, the city expects an additional 2,473 ha of industrial land from seven projects.

Industrial development in Hai Phong is fundamental to residential and commercial demand and investment opportunities. It underpins workforce growth, the expansion of expat communities, and increasing wealth levels. Foreign and local investment will have a ripple effect, which will create interesting business opportunities in Hai Phong for developers, investors, and service providers.

Hai Phong's economic strength, rising FDI inflows, and robust infrastructure make it a dominant force in Viet Nam's industrial landscape. It is a prime destination for investors, developers, and tenants. With solid demographics and impressive GRDP growth, Hai Phong's industrial sector is set for substantial expansion, which will support residential, commercial, and hospitality real estate development. Commitment to infrastructure projects fortifies Hai Phong's strategic position, ensuring seamless connections with domestic and international markets. Hai Phong's standing in Viet Nam's industrial landscape presents a promising landscape for future prosperity and real estate development.