viet nam real estate trend 2019

Viet Nam real estate market trend 2019

Economic experts and representatives gathered together at a teleconference on investment trends and opportunities in Viet Nam real estate market, held in Hanoi on December 11.

Participants focused on analysing, predicting, and coming up with solutions to help develop the real estate market in a balanced, stable, and sustainable manner; as well as help investors and the public better understand the upcoming market trends of 2019.

Viet Nam real estate market trend 2019

Nguyen Manh Ha – Vice Chairman of the Vietnam Real Estate Association (VNREA), the event’s organiser – said that statistics from the association shows that the Vietnamese real estate market continues to be stable with supply on the rise compared to 2017.

Beside Ha Noi and Ho Chi Minh city, other localities such as Dong Nai, Binh Duong, Bac Ninh, Bac Giang, and Phu Tho have also recorded positive signals in their property markets.

Ha said large projects like miniature cities with full services and synchronous infrastructure, such as those invested by Vingroup, are a prominent trend in the market, which is said to contribute to orienting the future of the sector.

Due to the abundant supply, sudden rises in real estate price are not likely in 2019, Ha stressed, adding that the market will continue to maintain stability throughout the year.

A brighter point in the real estate market is the industrial real estate segment, which is considered a new wave in Vietnam.

There is huge potential to development the segment as Vietnam becomes an attractive destination to foreign investors, especially those operating in industrial production.

The development of industrial zones must be synchronised to attract foreigners, participants said.

Regarding capital sources for the real estate market, Can Van Luc from the Bank for Investment and Development of Vietnam (BIDV) said that some companies have taken initiative in issuing bonds so they do not depend on the banking system, adding that this is a positive signal.

Source: VIR

industrial property

Industrial property: Local and foreign corporations are in strong tie

2018 will continue to see high demand for industrial property with strong investments from many operators,…

industrial property

Cushman & Wakefield has advised on a record number of transactions for our firm this year, from land and building acquisition and straight leasing deals to more challenging build-to-suit and divestment transactions. In each case, the demand for more sophisticated transactions has been driven by foreign groups, but was ultimately dependent on the capabilities and actions of local landowners, investors, and, in some cases, third-party developers.

The trend of foreign and local groups co-operating has been gathering strength in the last few years and as foreign groups become more accustomed with the opportunities, constraints, and local business practices, we will see more transactions and larger investments into the sector. Equally, the willingness to enter into transactions and the capabilities of local groups have improved quickly, which, along with demand from foreign groups, has improved investor confidence. Additionally, we will continue to see lower capitalisation rates as well as higher rents and land prices as a result of increased investor and occupier demand.

Whilst all market indicators are positive, the market needs to keep up with demand in terms of capabilities, quality, and security to continue to drive the industrial property segment, an important real estate market segment and indeed, one of the largest contributors to the Vietnamese economy. Many challenges remain in doing business in the industrial and logistics sectors. Physical, legal, and simple business practice issues still need to be overcome in almost every transaction and these issues limit the areas in which foreign companies will do business.

industrial property

In 2018, this will pose some risks to Vietnam as premium locations or sites for multinational investors become limited. While there are some 320 industrial zones (IZs) in Vietnam, only 13 per cent are foreign-owned and a low percentage of the entire 91,000 hectares of industrial land meet the critical needs of global corporations. Vacancies in the best industrial areas are extremely low and many companies are now having to compromise on location or quality, which will affect the competitiveness of Vietnam versus other countries.

Cushman & Wakefield recently fielded a question on the availability for Grade A warehouse space from a large Western company looking for a significant warehouse footprint in Vietnam. In fact, what the company considered Grade A does not yet exist in Vietnam. That is not to say that it cannot be built, but with a two-year project timeline for any build-to-suit opportunity, the company may indeed look elsewhere for such a facility if it can be procured easily and quickly.

In this example, the challenge for the incoming company was twofold: firstly, to find available land in suitable areas at a competitive price point, and secondly, to partner with a landowner and developer with a proven track record in delivering high-quality warehouses.

In too many cases one or the other of these key components cannot be found in one site and costly compromises need to be made in terms of location (logistics cost) or construction quality (risk, operational inefficiency).

The solutions to these issues are simple in practice, but we have yet to see true competition among local developers and landowners to deliver projects of the quality most foreign groups’ demand.

There is a real opportunity for local landowners to attract more foreign groups to their IZs and in the next couple of years early-movers will get the highest reward. In some cases, there are opportunities to retrospectively improve either zone infrastructure or demolish and rebuild old, inefficient buildings. Equally, expectations and sometimes the approach of foreign companies or groups could be improved. As with any business in Vietnam, there is never a quick fix, but through better planning and understanding, we would certainly see fewer aborted or compromised projects—foreign groups only need to position themselves better.

Typically with factories, large foreign groups prefer to build their own facilities as they are obviously very particular to that company’s needs. However, warehousing is broader in terms of the type of end user and features more simple construction. This is where we see more obvious opportunities for current IZs or those entering the market to capitalise on good demand. Many IZs will offer standardised ready-built facilities, often with varying degrees of construction quality, but many could improve even their smaller facilities in the future. Warehousing trends are changing and occupiers are looking to drive efficiency in their buildings.

To do this, some simple base-building improvements can be made which include higher cleared height, better column spacing, higher floor loads, and stronger floor loading. Naturally, this will push up construction costs a little, but in return occupiers get better efficiencies through cubic meter capacity and layout design and thus can justify a higher rent. If developers were also willing to consider meeting better fire code regulations over and above the Vietnamese standard codes, occupiers may also be able to offset some expenses from lower insurance premiums which could also go into their rent budget.

Looking to 2018, we will see more M&A deals in IZs and hopefully more occupiers looking to take advantage in sale and leaseback structuring.

2017 saw the first real test for sale and leaseback, with an occupier essentially raising capital on an asset and securing a long-term lease with an investor creating a bond-like yield.

Local investors will be more aggressive to acquire more of these facilities, whilst foreign investors fall behind in appraising the yield profile, which is not yet competitive enough versus other countries in the region. However, we do not consider this a problem for the short term. The deal structuring for sale and leaseback remains complex, but the conveyancing process can be fast with the right buyer and right seller advisory team on board.

Land and rent will continue their steady increase. Across Hanoi rent per square metre per term has increased by 1 per cent year-on-year, with Ho Chi Minh City performing better at 2.5 per cent. The largest growth experienced across the northern region was Haiphong, averaging at 4 per cent year-on-year, and Dong Nai in the south with 5.9 per cent.

In 2016, Bac Ninh in the north and Binh Duong in the south were the best performers in terms of growth and there is an obvious shift in demand in 2017. Bac Ninh actually recorded a fall of 2.9 per cent in pricing in 2017 from the bump in 2016 due to high pricing levelling out and improving infrastructure in areas like Hung Yen.

industrial property

In the extreme, Cushman & Wakefield has experienced some asking rents increase as much as 10 per cent for the best IZs. Quality will continue to outperform and there is willingness from occupiers to pay higher prices, but only if they can see genuine improvement in zone infrastructure, management standards, and construction quality.

Source: Vir

This is the era of logistics

Logistics is a crucial component of the Vietnamese e-commerce market to succeed and reach its full potential.

logistics

Many foreign logistics providers and e-commerce operators are making efforts not to miss an opportunity to offer e-logistics and meet the rapidly growing demand.

The heightened emphasis on supply chain efficiency and effectiveness over the past 12 months in a bid to deliver goods with speed and agility for consumers has, and will continue to have, positive spillover effects on the industrial property market.

Stephen Wyatt, Country Head of JLL Vietnam comments: ‘With considerable growth in smartphone penetration in major cities, the e-commerce market will  grow significantly as the shopping trend via smartphones keeps increasing every year, resulting in the resonant expansion of this market and more pressure on the logistics industry. Many e-Commerce firms are picking up the pace to keep up with the demand from customers.’

logistics

A “prime” example of fulfilling this customer value proposition is Amazon.

This year’s Amazon Prime Day was one of the largest global shopping events in Amazon history – taking place across 17 countries with more than 100 million products purchased. That is a lot of physical goods circulating within warehouses and being transported across local, domestic and international distribution networks.

Major e-commerce and logistic players have been on the move to secure logistics space to efficiently fulfil orders – encompassing orders domestically received and/or orders that require overseas export distribution.  This has spurred a renewed appetite for pure industrial space in inner ring locations – optimal for the last leg of delivery.

Sydney, being the most densely populated city in Australia and having the most constrained supply of industrial land, has recorded the strongest rate of annual take-up of industrial space within the inner sub-markets.  Between 2013 and 2017, industrial take-up within Sydney’s inner locations by transport, logistics and e-commerce sectors has recorded a five-fold increase.

There is no doubt that major e-commerce players will improve their offerings and further develop and expand their logistics and supply chain network in global. This, along with the projected growth in the e-commerce sector, will ultimately mean an increasing volume of physical goods circulating – and industrial space is at the forefront in capturing the positive spillovers from this expansion.

Source: Jll

 

Viet nam warehouse market

Preview on Viet Nam Warehouse Market 2018

According to CBRE research, the demand for the warehouse market continues to be backed by improvements in manufacturing and consumer spending, and logistics rents are expected to increase in the next few years.

According to the General Statistics Office of Vietnam, in January 2018, manufacturing production increased by 23.8% year-on-year. The most notable improvements were recorded in tobacco (21%), textiles (23%), apparel (25%), and especially in the manufacturing of computers, electronics, and optical products (38%).

There have been several large-scale developments in these fields in recent years from global brand names such as Samsung, Foxconn, and LG.

In 2017, Vinfast, a local automobile manufacturer, is planning to open a car production line in Hai Phong city and to launch their first model in 2020. This key project will attract vendors and suppliers to Hai Phong city which will increase the demand for warehouse space.

Consumer spending is growing and is forecast to continue to increase over the next few years, especially in e-commerce. Several large internet retailers from China have entered the Vietnamese market, including Alibaba, JD.com, and Tencent. The expansion of modern retail outlets from giant international corporations such as Lotte and AEON, as well as the rise in the number of convenience stores are key drivers for warehouse demand.

According to CBRE enquiries, 3PLs (third-party logistics), retail, and manufacturing are drivers of the warehouse market. The preferred locations are Ho Chi Minh City, Binh Duong, Hanoi, Bac Ninh, and Dong Nai.

CBRE forecasts that the 4.0 Industrial Revolution also affects the warehouse market. More quality supply will come to the market in the next three years in the northern and the southern areas. In the regional market, automated storage and logistics robots are recommended in prime logistics space with flat layout, stable power supply, and excellent internet connectivity to increase competitiveness.

Viet Nam warehouse market

Due to its strategic locations closer to regional logistics hubs, such as Hong Kong, the southern region has long been the leading cluster in the Vietnamese industrial sector. In the southern area, rental rate will increase by 4 per cent in 2018 and 3.5 per cent in 2019 and 2020.

The southern area is expected to achieve higher rental growth thanks to strong demand from retailers, 3PLs, and manufacturers, as well as suppliers who come to the market from Gemadept, Saigon Newport, and Saigon Depot. However, the southern area is also expected to have a higher vacancy rate of 20 per cent in 2018 and 2020.

Source: VIR

HomeNext Corporation
Liên hệ
  • Địa chỉ: Số 7A2, đường số 9, KDC Hiệp Thành 3, TP. Thủ Dầu Một, Bình Dương
  • Hotline: 0908 480 055
  • Hotmail: sales@homenext.vn
  • Giờ làm việc: 24/24 ,Thứ 2 - Chủ nhật
Đăng ký
Fanpage
Hotline
0908 480 055