Optimistic about Property Market Growth in 2021

11:03:33 AM | 3/4/2021

Vietnam currently has a lot of advantages to boost the real estate market in the post-COVID era, said Mr. David Jackson, CEO of Colliers International Vietnam, a global real estate investment and trading group.

Vietnam's advantages from the trade war between China and the United States, its free trade agreements (FTAs) and its ability to control the epidemic outbreak are all good factors to attract supply chains to Vietnam. This has motivated investors, manufacturers, and logistics and warehousing operators in the region and the world to increase their confidence in Vietnam, despite existing difficulties in 2020.

“Demand from international investors will not decrease and many financial institutions will still focus on investment in Vietnam in 2021. Industrial property, industrial zones and logistics are catching increasing attention from international investors as they are seeing Vietnam as a safe and well-regulated country with a large population expected to bring great potential and increasing consumer demand. Therefore, the industrial property market in Vietnam will be the most dynamic segment by 2021,” he noted.

Besides the industrial property segment, the office segment is also expected to keep growing steadily in 2021. Right from the beginning of the year, this market has been very active, largely driven by customers in Vietnam. Many South Korean and Japanese investors and businesses are interested in the Grade A office segment. Currently, many investors and companies are actively carrying out their projects and supplying high-class offices in major markets like Hanoi and Ho Chi Minh City. According to Cushman & Wakefield data, the emergence of the office market in Thu Duc City in the last three months of 2020 showed that this market will grow in the future. In the next five years, Thu Duc City is forecast to have an additional 390,000 square meters of office space of Grade A and Grade B, most of which will be in Thu Thiem New Urban Area.

Ms. Hoang Nguyet Minh, Director of Commercial Lease, Savills Hanoi, said many companies have flexed their working style and are renting offices economically and conveniently, with a focus on developing shared areas instead of having clear divisions. When renting an office, they tend to choose sustainable projects with carbon neutrality standards being a priority. Developers will have to incur additional costs to meet sustainability standards, but these “green” buildings will bring countless other benefits to all stakeholders. It is more likely that new environmental, social and governance (ESG) standards will begin to have a stronger impact on the real estate market, while new projects will focus on sustainability.

Due to the effects of the trade war and the COVID-19 pandemic, some large-scale multinational corporations (MNCs) in Asia are shifting their production facilities out of China to other countries or relocating part of their production to other countries, called "China + 1" strategy, to mitigate risks. The China + 1 trend will result in increased demand for industrial real estate, logistics services and offices in such markets as Japan (especially around Tokyo), Taiwan (China), India and Vietnam. Moreover, many governments are also encouraging real estate leasing businesses to adopt the "China + 1" strategy with new regulations, tax and manufacturing incentives.

By Nguyen Mai, Vietnam Business Forum