FDI in industrial property ranks the first

BAO DAU TU

Vietnam-Singapore Industrial Park III in Binh Duong province invested by Vietnam Singapore Industrial Park (VSIP) was the leading project among 11 FDI projects in real estate sector in February 2017. The industrial park covers a planned area of 1,000 hectares in Hoi Nghia commune (Tan Uyen town) and Tan Lap commune (Bac Tan Uyen town) with 50-year duration.

With the third project in Binh Duong, VSIP raised the number of industrial park development projects in Vietnam to seven with a planned area of more than 6,000 hectares. This was also the FDI project having the largest registered capital among all FDI projects granted with licenses nationwide in February 2017.

The investment trend in industrial park infrastructure and warehouse property continued since the end of 2016 when Vietnam’s economic growth indicators constantly improved and were assessed by many organisations to be one of the most promising markets in Asia-Pacific region.

A typical project licensed at the end of 2016 in Quang Ninh was Nha Mac sea port and industrial park complex invested by Cayman Islands, the Middle East Utilities Company Pte. Ltd (Singapore) and Asian Hongkong Infrastructure Investment Co., Ltd

With the registered capital of $315.4 million, the complex will focus on investment in building and trading sea port infrastructure, industrial zones in which the sea port system includes 10 terminals for 50,000 dwt vessels and logistics service on an area of more than 1,100 hectares. In the immediate future, in 2017-2021, the project will be implemented on an area of 318.8 hectares and by 2032-2036, the entire infrastructure of this industrial park will be completed.

Another industrial park project which also registered to Nghe An was Hemaraj industrial park invested by Hemaraj group (Thailand). Hemaraj signed investment cooperation agreement with Cienco4 and Nghe An People’s Committee to carry out the project with a total investment of $1 billion and a scale of 3,200 hectares divided into five stages, starting from 2017.

Back to VSIP III project in Binh Duong, in 2017, foreign investors poured $345.5 million in real estate sector in Vietnam (accounting for 10.1 percent of the total FDI), up nearly 12 times compared to $29.07 million in the same period of 2016.

As of December 31, 2016, 324 industrial parks were established nationwide with a total natural land area of 91,800 hectares. Of which, 61,700 hectares (67 percent of which was leasable industrial land) including 220 industrial parks with a total natural land area of 59,600 hectares was put into operation, and 104 industrial parks with a total natural land of 29,700 hectares were in the process of compensation for site clearance and core construction.

Forecasting about Vietnam’s real estate market 2017, Stephen Wyatt, country head of Jones Lang Lasalle Vietnam (JLL Vietnam) said this will continue to be a development year for Vietnam property market. The country’s economy has constantly improved with positive economic indicators and is recognised as one of the most promising markets in Asia-Pacific region.

“The market will continue recording positive operations in such segments as apartments, offices, hotels and industrial parks. Based on the demand from both domestic and foreign investors, we believe that 2017 will be a record year for merger and acquisition (M&A) activities in Vietnam property market”, said Stephen Wyatt.

As per Alex Crane, general manager at Cushman & Wakefield Vietnam, the market and macro-economic conditions at the moment and in the near future are creating an almost perfect context for industrial park real estate business.

“Although there are winners and losers in the market, the high stability will create confidence for investors in the industry which is considered to be the most important industry for Vietnam’s economic growth. The land price and rents which have remained stable for a long time and the ability to control supply problems make it possible to maintain this state in a near future”, said Alex Crane.

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