Increase demand for Build-to-suit solution and short-term leases after COVID-19

On April 24, Long Hau Corporation (LHC) hosted a webinar titled “Investment opportunities in Vietnam’s industrial real estate industry during and after COVID-19”, which was well attended by over 165 participants.

The webinar, was joined by Mr. John Campbell, Industrial Services Manager, Savills Vietnam and Mr. Trent Davies, International Business Advisory Manager, Dezan Shira & Associates, addressed the impact and investment opportunities in Vietnam's industrial real estate during and after the COVID-19, so that investors could have a good preparation for a post-pandemic recovery.

Possible silver linings for Vietnam’s industrial real estate

Speaking at the webinar, Mr. John Campbell said, one of the obvious silver linings related to the pandemic will be an increase in the acceleration of manufacturers moving their operation from China to Vietnam. The reason why Vietnam makes itself a top of choice is because of the stable government and business environment.

The expert also raised another crucial point that wage inflation might be happened in China after the pandemic, so companies will look to move to South-East Asia for cost cut. This is going to prompt a shift of production to Vietnam or other South-East Asian countries.

Mr. Trent Davies added, the EVFTA will be in affect from Q3 which promises an improved market access for both European and Vietnamese companies. This is surely an excellent opportunity for Vietnam to continue a transition towards higher-value industries.

A build to suit project in Long Hau Industrial Park

Opportunities for industrial park developers after the outbreak

That said, new FTAs will lead to a growing interest from European manufacturers. Demand for manufacturing plots near main citites and ports has increased, while the occupancy rate in key industrial provinces has reached 75%. This presents some interesting opportunites for the industrial park developers that they can choose the quality of their tenants.

Next, many multinational corporations will be more cost-consious after the pandemic. They may opt for shorter-term rental properties that aren’t much relied on capital expenditure such as build to suit solution. “We are going to see more of the demands for developers to have capability to do build to suit solutions and industrial park developer will diversify in offering ways from just ready-built factories or land leasing”, said Mr. John Campbell.

Taking an example, Long Hau Industrial Park pioneers in developing solutions to meet the need of investors. The park offers a wide range of products such as ready-built factories, build to suit and retail/office leasing. Long Hau also provides many services from consulting to operation-related services which help investors reduce risks and grow sustainably.

In short, the COVID-19 causes serious disturbance to the development of Vietnam’s industrial real estate. It is still early to make predictions on when and how the outbreak will end. However, it is necessary that investors start developing a post crisis strategy that enables them to quickly get their business back on track and prepare for investment opportunities in view of the outbreak’s end.

You can find full recording of the webinar below: