Industrial property segment sees rising FDI despite new COVID-19 outbreak

This year has witnessed new M&A deals and improvement in industrial land supply. The largest manufacturing projects in the first half of 2021 came from Hong Kong (China) and Singaporean investors that targeted northern Quang Ninh and Bac Giang provinces.

Vietnam’s FDI inflows rose by 3.8% year-on-year to US$10.5 billion in the first seven months of 2021, with processing and manufacturing taking the lead, raking in US$7.9 billion, or 47.2% of the total, data from the Ministry of Planning and Investment showed. The real estate came third with registered FDI of US$1.16 billion.

“By region, the North received the majority of newly registered manufacturing investments with a substantial US$1.97 billion, representing a 64% share,” said John Campbell, Manager of Savills Vietnam’s Industrial Services. The South followed with US$728 million (23%), while the Central region attracted US$395 million (13%).

In terms of provinces, Bac Giang received the highest amount of newly registered manufacturing capital with US$589 million, closely followed by Quang Ninh with US$569 million, and Bac Ninh with US$222 million. Representing the South, Binh Duong came in fourth with US$208 million.

For foreign investors, Hong Kong invested the highest amount of manufacturing FDI during the period with over US$852 million, accounting for a 27% market share. Singapore was in the second place with US$655 million (21%), followed by China with US$549 million (18%), and the Republic of Korea with US$330 million (11%).

John said the largest manufacturing projects in the first half of the year were from Jinko Solar and Fukang Technology from Hong Kong and Singapore investing US$498 million and US$270 million in Quang Ninh and Bac Giang, respectively.

Regarding new projects, Logos Property’s 81,000-sq.m project in the Vietnam-Singapore Industrial Park (VSIP) Bac Ninh 1 is expected to begin operation in the fourth quarter of 2021.

New player in the market, KCN Vietnam Group JSC, acquired a significant 250-hectare land plot with an investment of US$300 million, aiming to develop premium, sustainable factories and warehouses for rent in Vietnam with a national portfolio spanning across Bac Giang, Hai Phong, Hai Duong, Dong Nai and Long An.

He also noted that various new M&A deals have been inked this year. Boustead Projects Co. Ltd., for example, singed an options agreement for the proposed acquisition of 49% stake in KTG & Boustead Industrial Logistics JSC. If successful, the partnership will consist of 13 real estate seed assets amounting to US$141 million in gross asset value covering about 840,000 sq.m of land and about 550,000 sq.m of gross leasable area, he added.

ESR Cayman Limited, the largest Asia-Pacific-focused logistics real estate platform, and BW Industrial Development JSC (BW), the leading logistics and industrial real estate developer and operator in Vietnam, have entered into a joint venture to develop 240,000 sq.m in My Phuoc 4 Industrial Park near Ho Chi Minh City.

The partnership marks ESR’s entry into Vietnam, expanding the group’s Asia-Pacific footprint in the high-growth Southeast Asia region.