Vietnam is chosen as a strategic location
In 2021, by entering Vietnamese market, ESR Cayman Limited (Hong Kong), the biggest logistics real estate developer in Asia – Pacific, officially marked the operating expansion in Southeast Asia, a market appreciated by this company with a high growth rate.
Specifically, ESR Cayman Limited has cooperated with BW Industrial Development Joint Stock Company to establish a joint venture to develop My Phuoc 4 Industrial Park in the North of Ho Chi Minh City. After being completed, My Phuoc 4 Industrial Park covers 240,000 m2 of logistics area and light industrial facilities.
This first breakthrough is expected to “lay a solid foundation for ESR’s growth plans” in Vietnam. Commented Jeffrey Shen and Stuart Gibson, the two co-founders of ESR, Vietnam’s industrial real estate and logistics real estate market is in the “new age”. “This is one of the most promising markets in Southeast Asia, benefiting from a series of favorable macroeconomic factors, including high and stable GDP growth, increased income rate, emerging middle class, rapid urbanization and infrastructure development,” commented the two ESR founders.
The projects developed by the international well-known investors have brought Vietnamese market the new generation and higher quality warehouse models.
In 2021, the form of capital contribution and share purchase attracted 120 foreign investors with a total value of more than USD 1 billion, accounting for more than 38% of the total newly registered foreign investment capital, increased capital and contributed capital in the real estate field, according to the data from the Ministry of Planning and Investment.
Logistics real estate has generally become an attractive force for foreign capital to flow into the market because foreign investors sense the developing potential and demand of logistics infrastructure in Vietnam, in the context of the high rising wave of production shifting from abroad to Vietnam along with FDI inflows into the processing and manufacturing industry in 2021 (gained USD 18.1 billion), continuing to increase compared to 2020.
Most logistics projects appear in the list of newly registered foreign investment projects. It is remarkable that the newly licensed project of USD 185 million invested by Amigos An Phu Holding Pte. Ltd (Singapore) in New Motion Industry Company Limited in Phu Tan Industrial Park, belonging to Binh Duong Industrial – Service – Urban Complex, engaging in two main segments, including the manufacture of television screens and display screens; investing in building warehouses, factories and offices in industrial parks to operate, lease, provide warehousing services and store goods.
Followed by USD 80.6 million project in BW Tan Phu Trung Industrial Development Limited Liability Company, the warehouse was invested and built by BW Industrial Dutch industrial real estate “Giant” for leasing and providing logistics services in Tan Phu Trung Industrial Park, Cu Chi District, Ho Chi Minh City.
Expansion of activities
Before the boom of e-commerce, more and more enterprises are hunting for industrial land and logistics real estate to develop logistics services, modern and more efficient warehousing, focusing on last-mile delivery and value-added services.
For example, Boustead Projects (Singapore) industrial real estate group is expected to its business expansion plan to Vietnam market, although the domestic partners’ share purchase activity is behind schedule because of the epidemic. Mr. Wong Yu Wei, Executive Vice President of Boustead Projects said: “With the KTG & Boustead Industrial Logistics Fund project in Vietnam, we are expected to strategically develop our real estate portfolio targeting the key industrial zones in Hanoi and HCMC areas, at the same time, improve the development capacity of logistics services and industrial park projects. This real estate business strategy, which can expand with the improvement in construction activity, is expected to form a stable foundation for the future Boustead Projects growth.”
Previously, in mid-2021, BP-Vietnam Development, a subsidiary of 100% capital owned by Boustead Projects Group, signed an option agreement with Khai Toan Joint Stock Company (KTG). As the agreement, BP-Vietnam Development will pay Khai Toan Joint Stock Company an option deposit (fully refundable) totaling VND 289.25 billion (equivalent to USD 12.5 million), payment in 3 tranches, upon Khai Toan meeting the conditions for each tranche.
Specifically, Khai Toan granted BP-Vietnam Development the option of 49% share capital in the parent company that is KTG & Boustead Joint Stock Company (KBJSC) for KTG & Boustead Industrial Logistics Joint Stock Company (KBIL). Conversely, BP-Vietnam Development will grant Khai Toan the option to sell 49% of the equity in KBJSC to BP-Vietnam Development, upon meeting all conditions in the agreement.
Reviewed by Agility, Vietnam is one of the top 10 emerging logistics markets in 2021 with the fastest growth out of the top 50 countries, reaching an index of 5.67. The compound annual growth rate (CAGR) is about 7% from 2021 to 2026. With the rapid entry of foreign investors during the 2 years of Covid-19, Vietnam’s real estate market witnessed the increase of international standard ready-built warehouses. Projects developed by such international well-known entities as SLP – GLP joint venture, Logos Property and ESR have brought Vietnamese market the new generation and higher quality warehouse models.
In addition, foreign logistics developers also focus on equipping cold storage for e-commerce and multi-industry tenants, and big backup power system in the high-rise warehouses.
Source : Baodautu
