HANOI: Vietnam is looking to take advantage of the current market conditions and is making a big push to establish itself as the next manufacturing hub for Southeast Asia,” said Wyatt.
“A number of key factors are helping to attract companies, including lower labour costs, economic zones (EZs) offering tax incentives, and the signing of free trade agreements (FTA’S) including the EU, Korea, and most recently the CPTPP,” Wyatt said.
Meanwhile, challenges still remain with the lack of good quality infrastructure and unnecessary bureaucratic red tape. However, JLL believes there is considerable upside in the industrial and logistics sectors in the coming years and they expect to see strong demand from investors, developers, and manufacturers continue, he added.
Japan and Australia remain the key core markets for logistics property in the Asia-Pacific, while China—although not as transparent—has matured rapidly and boasts a substantial stock of modern assets. However, developers and investors active in these key markets are now seeking growth elsewhere in the region.
US-based private equity firm Warburg Pincus recently formed a joint venture with Becamex IDC Corporation to develop institutional-grade industrial and logistics properties across Vietnam.
The shift of manufacturing bases away from markets like China, coupled with the rapid rise of domestic consumption means the Vietnamese industrial real estate market is in the ‘early innings’ and at an inflection point for outsized growth,” said Jeffrey Perlman, head of Southeast Asia at Warburg Pincus.
Investors like Warburg Pincus are heading to developing logistics markets because of the yield arbitrage and maturing local economies, according to Michael Fenton, JLL’s head of Industrial Division in Australia.
“The domestic demand and e-commerce are the key drivers for the interest in logistics real estate in markets like India and Indonesia,” said Fenton. “The growth of logistics in developing markets is being driven domestically, especially by the needs of e-commerce. India is talked about a lot at the moment. The introduction of a goods and services tax and a formal Real Estate Investment Trust market, means the country will have a more transparent real estate system, which will be of more appeal to foreign investors.”
