Vietnam is witnessing a surge in foreign investment into its real estate market as economic recovery from the pandemic gains momentum.

In January the World Bank forecast a 5.5% GDP growth for the Southeast Asian country in 2022 from 2.6% last year, while Fitch Ratings expects the expansion to accelerate to 7.9% this year and 6.5% in 2023,

Vietnam’s digital economy is estimated to have expanded 31% to US$21 billion in gross merchandise value (GMV) in 2021, bolstered by a 53% year-on-year growth in e-commerce, and to reach US$57 billion by 2025, according to an industry report by Alphabet’s Google, Singapore state investor Temasek Holdings and global business consultants Bain & Company.

Amid the economic rebound, foreign companies are rushing to tap the country’s real estate market. Taiwan’s largest logistics real estate developer Ally Logistic Property (ALP), Taiwan’s largest logistics property developer, plans to enter the Vietnamese market this year after making a US$1 billion investment to develop smart warehousing solutions in Malaysia.

ALP is revving up expansion plans across Southeast Asia, with Malaysia and Vietnam as its primary target countries. The region’s internet economy is primarily underpinned by its e-commerce sector, which recorded a 49% increase in GMV last year, from US$117 billion to US$74 billion, according to the report.

Advisory services

Global property consultancy Knight Frank launched on February 17 a new subsidiary – Knight Frank Vietnam Property Services – to provide brokerage for office, industrial and logistics property, capital markets and investment property, consultancy and research, among other services.

“Vietnam’s key position in global supply chains has helped propel local service industries, leading to industrial land prices rising by an average of 8% per year and the fast-growing office market maintaining around 90% occupancy in Ho Chi Minh and Hanoi,” the London-headquartered firm says in a statement.

According to Knight Frank, Vietnam’s real estate market is experiencing rapid growth with substantial foreign investment inflows despite the pandemic.

Kevin Coppel, managing director for Asia-Pacific at Knight Frank, sees Vietnam as “an attractive market with promising fundamentals – a young, well-educated population, strategically located for the region’s supply chains, enviable economic growth, growing private wealth, and an increasingly important market for our international clients”.

The firm’s new unit is based in Ho Chi Minh City, Vietnam’s economic powerhouse, and led by its newly appointed managing director Alex Crane and director of capital markets Ben Gray.

“We will soon make additional announcements on our core services but naturally will be hitting the ground running on behalf of many local clients in Vietnam and new ones that will be introduced through Knight Frank’s extensive global network,” says Crane. He was managing director at Cushman & Wakefield Vietnam from June 2015 and April 2021, then principal at Crane & Co. Real Estate Consulting from April to December last year.

Australian venture

Australian logistics specialist Logos on February 17 announced a joint venture with Manulife Investment Management to acquire an 11-hectare, build-to-suit logistics asset in the greater Ho Chi Minh City area. This is Logos’ first partnership with Manulife and an important investment to support the growing demand for modern, high-quality logistics facilities in Vietnam.

Located in the Dau Giay Industrial Park in Dong Nai province, next to Ho Chi Minh City, the property comprises three high-tech warehouse facilities, two of which were completed in 2021 and the third to be completed in late 2022. Upon completion, the property will total 116,000 square metres of modern logistics space valued at over US$80 million. The property is 100% committed to a global occupier on an initial five-year lease term. Logos did not disclose the occupier’s name.

Entering Vietnam in August 2020, the Australian company established the Vietnam Logistics Venture. The latest acquisition with Manulife represents the venture’s fourth acquisition in the country.

Glenn Hughes, Logos’ head of Vietnam, says: “We are seeing many exciting opportunities in Vietnam as international companies continue to diversify their supply chains across multiple countries, investing in their facilities to ensure supply chain resilience while meeting the growing consumer demands of e-commerce.”

Alibaba logistics park

Alibaba Group’s logistics arm Cainiao is another investor in Vietnam’s real estate sector. It announced on February 15 that its new Cainiao PAT Logistics Park in Long An province’s Ben Luc District, less than an hour’s drive from Ho Chi Minh City, would begin operations in the first half of 2022.

Cainiao says the launch of the 110,000 sqm warehousing leasing space comes as the country sees a surge in demand for local goods and a growing need for warehousing facilities.

Long An is part of Vietnam’s Southern Key Economic Zone where Ho Chi Minh City is the core. The province is also the gateway to the Mekong Delta, which is the country’s rice bowl and accounts for about 20% of the global rice trade.

“The launch of Cainiao’s logistics park in Long An is very timely and we believe it will play an instrumental role in mitigating supply chain disruptions by providing the most optimum warehousing facility to strengthen businesses’ inventory management strategy,” says Eric Xu, general manager of Cainiao Smart Hub.

In the north, Honda Logicom Vietnam, a subsidiary of Japanese firm Honda Logicom, will start building a general logistics warehouse and bonded warehouse in June 2022 in DEEP C Industrial Zones in the port city of Hai Phong.

The zone is close to Hai Phong Port, the largest port system in northern Vietnam, and Lach Huyen deep seaport, enabling Honda Logicom to enjoy cost benefits and time advantage. With a total area of 5,300 sqm, the new facility is twice the size of Honda Logicom’s three operating warehouses in Vietnam.

Singaporean investment

In Singapore, Mapletree Logistics Trust, managed by Mapletree Investments, announced on January 26 that it has secured a 100% interest in three new logistics assets in Vietnam through acquisitions of three property holding companies. The real estate investment trust did not provide details of the deals.

Singapore’s state investment corporation Temasek Holdings is among the investors in a US$2 billion funding round by Asian logistics company J&T Express, which will support the expansion of its global delivery network and cross-border businesses. Founded in 2015, J&T Express provides express services and transnational logistics for a network covering 10 countries including China, Indonesia, Vietnam, and Singapore. In Vietnam, the firm has been making non-stop expansions and is building its 37th transshipment hub on a six-hectare site, set to be ready for operation in the first quarter of this year.

Also, Singapore’s YCH Group and Vietnam’s T&T Group are co-developing a US$200 million logistics hub, Vietnam SuperPort, near Hanoi. It is the first project under the Asean Smart Logistics Network, which was launched in November 2020 to support the Asean Connectivity Master Plan 2025. The World Bank’s investment arm IFC is supporting the project development by leveraging its breadth of knowledge in developing and investing in dry ports and container terminals around the world and strong track record in project structuring.

Another Singapore company, CapitaLand Development (CLD), part of Temasek-backed CapitaLand Group, has acquired a prime site for its first large-scale residential project in Vietnam, with a projected total gross development value of approximately S$1.12 billion (US$828 million). With an area of almost 20 hectares, the site is located in Binh Duong New City in the southern province of Binh Duong, about 45 minutes’ drive from Ho Chi Minh City.

The seller is Binh Duong-based Becamex IDC, a leading developer of industrial, urban and transport infrastructure in Vietnam. The site would be transferred to Binh Duong New City, which CLD set up for almost US$242.2 million, including value-added tax.

According to CLD, it will be developed into a prime large-scale residential project with over 3,700 freehold residential units across a mix of low-, mid- and high-rise residential developments, providing homes for about 13,000 residents.  The project is expected to be launched in phases and construction of the first phase, consisting of about 1,300 landed houses and apartments, will start this year and is expected to be completed in 2024. The rest of the project is scheduled for completion in 2027.