FDI boosts southern industrial property market

09:37 | 07/09/2017 Investment

(VEN) - A recently released report by the global real estate company Savills showed that Vietnam attracted an additional US$19.22 billion in registered foreign direct investment (FDI) capital in the first half of 2016, up 54.8 percent from the same period last year. The increased FDI has had a positive impact on the southern real estate market, especially the industrial property market.

fdi boosts southern industrial property market
Many cooperatives have overcome difficulties and achieved effective operation thanks to transformation of their operational model

Growing industrial real estate market

In the first half of 2017, FDI projects already invested US$7.72 billion, up 6.5 percent from the same time in 2016. The continued expansion of real estate investment, especially by investors from Japan, the Republic of Korea (RoK) and Chinese Taipei, increased the demand for industrial land.

JLL Vietnam’s survey of industrial zones (IZ) in southeastern provinces (including Ho Chi Minh City, and Dong Nai, Binh Duong, Ba Ria-Vung Tau, Tay Ninh and Binh Phuoc provinces), found total IZ land of 38,308 hectares as of late in the second quarter of 2017, 25,556ha of which had been leased out to investors, an increase of 2.8 percent over the fourth quarter of 2016. Binh Duong and Dong Nai took the lead in terms of land supply and leased area, with IZ occupancy rates of 74.5 percent in the first half of 2017. By the end of the second quarter of 2017, land lease rates in the southeastern provinces increased US$2-US$5 per square meter compared to the fourth quarter of 2016. Ho Chi Minh City ranked first among surveyed provinces in terms of IZ land lease rates.

The increased FDI not only contributed to IZ infrastructure development but also the growth of other segments of the real estate market, such as offices for lease, hotels and shopping centers.

No bubble foreseen

According to the Ho Chi Minh City Real Estate Association (HoREA), in the remaining months of 2017, businesses will shift investment to development of property for low and average-income earners.

HoREA Chairman, Le Hoang Chau, said mergers and acquisitions (M&A) were expected to grow stronger, especially after the National Assembly’s resolution on handling bad debts took effect on August 15.

HoREA said a real estate bubble would probably not appear in 2017, given the timely and effective control measures put in place by the state. Businesses are trying to restructure their investment and product structures in compliance with market demand.

Major policy changes are expected from 2017-2020 to harmonize supply and demand and promote the real estate market’s healthy, sustainable development.

Thanh Thanh