Speaking at a VIR talk show, Dinh Hoai Nam, director and head of Business Development at SLP Vietnam, said, “Vietnam is a bright spot for foreign companies to implement their relocation and contingency plans. The country offers a quite good policy to woo foreign investors. SLP has invested in China, Japan, the United States, and Europe. Through GLP's observations and assessments, we believe that Vietnam is still a good market in the long term. It is the reason why SLP ventures into Vietnam. Over the past four years, we have stepped up our expansion from zero to 11 projects.”

SLP has a set of criteria and makes a complete analysis for evaluating a potential location. However, the company always takes the market factor into consideration. Specifically, manufacturers and developers mainly focus on the first tier markets, including Hanoi, Bac Ninh, Bac Giang, Hung Yen, and Vinh Phuc in the north, as well as Ho Chi Minh City, Long An, Dong Nai, and Binh Duong in the south.

These markets already have demand for industrial properties, alongside the available labour source, land funds, existing infrastructure, and connectivity ecosystem. Thus, investors can quickly kick-start their operations.

“After securing a strong footprint in these markets, we are scouting for investment opportunities in tier 2 and 3 markets,” Nam said. "By investing in non-traditional markets, we hope to optimise costs for investors. When comparing industrial park locations, we will look at two decisive factors, including the investor's reputation and the legality. If the investor is not reputable and the legality is not guaranteed, it will be risky to make an investment and get a return on investment. Another factor is the project implementation and financial capacity of the investor.”

Dinh Hoai Nam, director and head of Business Development at SLP Vietnam

One important factor is the integration of environmental, social, and governance factors. SLP and foreign investors are selecting industrial parks with the operation, management, and vision in line with sustainable development trends, he added.

Besides opportunities, there remain challenges regarding the soaring prices of industrial real estate in several localities. A number of tenants have noted that the sum of land, labour, and other expenses in Vietnam can be higher than in China. However, they are still making the move as part of the China+1 strategy and the unpredictable geopolitical environment.

“It is hard for developers to find and secure a good location. There are some downsides, as industrial property price hikes will lead to increasing input and output prices for tenants and manufacturers. To address these challenges, SLP has offered short-term policies to support tenants, which in turn lower our investment efficiency,” Nam said.

He added that the price hike was a short-term challenge. In the long term, the government and investors need to find ways to resolve the issue to ensure competitive investment costs compared with many other regional peers such as Thailand, Indonesia, and Malaysia.