Industrial property in Vietnam is stepping into the spotlight with the signing of the EU-Vietnam Free Trade Agreement.

Industrial property gains from EVFTA. (Photo: baodauthau.vn)

Michael Chan, head of sales and marketing at US-based BW Industrial Development JSC, told VIR that the EU-Vietnam Free Trade Agreement (EVFTA) is one of the most ambitious agreements concluded between the EU and a developing country and that it will leverage foreign direct investment (FDI) to Vietnam.

“European entrepreneurs are famously cautious, and it can take them up to nine months to conduct market studies before investing. The more aggressive groups will be Chinese or Asian-based manufacturers who export to the EU,” Chan said.

He also forecasts more demand for warehouses from industries such as motorcycles, cars, wine and spirits, pharmaceuticals, and chemicals, since EU investors will have better access to one of the fastest-growing countries.

This influx of investment will be an opportunity for leading industrial property for-rent developer BW Industrial and its ready-built factories that are both flexible in size and easy to set up.

Acting on these forecasts, BW Industrial has just injected a total of $105 million into two new projects in My Phuoc 4 Industrial Park (IP).

“My Phuoc 4 IP has good location, accessibility, and industry support capabilities. We plan to develop both ready-built factories and ready-built warehouses to cater to the increasing demand from our customers,” said Chan.

In 2018, BW Industrial acquired 230 hectares of IP space within a short time, and the company is set to expand by another 170ha this year.

“EU investors are showing extensive interest and a more transparent investment environment will amplify Vietnam’s reputation,” he said.

John Campbell, head of Savills Industrial said, “This latest FTA has brought even greater interest to ­Vietnamese industrial ­property. By enabling the ­latest production technologies to be set up here and ­increasing workforce training, the Vietnamese government is actively easing business fears of viability, labour shortages, and rising costs.”

“Moving to a more ­transparent business environment will help mitigate ­investor concerns and improve quality standards,” he added.

Apart from BW Industrial, many other industrial property developers have been actively expanding business in Vietnam. In November 2018, Mapletree Logistics Trust Management Ltd. announced the acquisition of a Unilever warehouse in Vietnam-Singapore Park I for $31 million. The warehouse will be leased back to Unilever for ten years.

Last December, Thailand’s Amata Corporation commenced construction of Song Khoai Industrial Park, part of the mega project Amata City Halong in the northern province of Quang Ninh. Covering nearly 6,000ha, the new project is planned as an integrated industrial city leading towards a smart city, with the total estimated investment capital of over $1.6 billion.