Thanks to the FTA and TPP, industrial property is getting attractive to foreign investors.

Thanks to the FTA and TPP, industrial property is getting attractive to foreign investors.

The series of free trade agreements signed between Vietnam and other countries will contribute to attract investment into the industrial real estate.

Significant agreements which Vietnam has signed recently  including the ASEAN Economic Community (AEC), Regional Comprehensive Economic Partnership agreement between the 10 ASEAN countries and 6 partner countries (RCEP), FTA with the European union, FTA with South Korea, the trans-Pacific Partnership agreement (TPP).

Recently, the Ministry of Foreign Affairs has announced further free trade agreements between Vietnam and other Asian and European Union (EAEU) officially taking effect on October 5.

Obviously, this diplomatic growth will would bring great benefit to many business fields of Vietnam. To real estate, CBRE consulting firm has recognized that the demands of the sectors relating to property such as industrial parks, warehouses, factories, and logistics industry will have considerable growth.

Specifically, to industrial land and warehouse, TPP will boost investment in Vietnam, especially from the main importer of the commodity products in Vietnam such as the US and Japan. Currently, US’s investment in Vietnam is still much limited compared with South Korea and Japan.

Companies from the United States will increase the production activities in Vietnam and re-import the products of Vietnam thanks to its tax exemption policies on important products such as garments. The US companies have had target on industrial land zones in the southern provinces of Vietnam, where there are a large number of textile factories under operation. Besides, businesses have factories in other Asian countries such as China, Thailand, Indonesia, India, .. will gradually move the investment to Vietnam to enjoy low tax rates from TPP and  FTA agreements.

This will make the demand for land and factories, warehouses in industrial zone increasing. The biggest beneficiaries are the investors of IPs, former businesses owning ndustrial parks, former port clusters and land.

According to Cushman & Wakefied, Vietnam is fastly becoming a world’s leading industrial destination due to low labor costs and locating in the main maritime traffic sector between Europe and the Americas. Many foreign businesses are attracted by Vietnam due to the speed of rapid industrialization, creating conditions for the formation of a new real estate trend: rental factories and warehouses fields. Production units as well as logistics will transfer in the near future since the land for such fields is not adequate while this demand tend to rise.

Not only domestic firms, foreign investors also have evicted instantly IZ investment capital. Amata Corporation (Thailand) has had project in Long Thanh Industrial Park (Dong Nai), and Sumitomo Corporation (Japan) also signed an investment memorandum on Thang Long Industrial Park III (Vinh Phuc).

According to experts, many of the foreign corporations are shifting investment out of China due to rising labor costs, so they will consider Vietnam_where has many advantages such as cheap labor and tax incentives. Formerly, the industrial real estate investment by foreign investors is often preferred in Indonesia or Malaysia but now they will be paying attention to Viet Nam.

Recently, LG of Korea has signed a lease agreement to Trang Due industrial zone of Kinh Bac with the rental of 650 billion, and another one have also signed a lease agreement to Ham Kiem I Industrial Park (Binh Thuan) of Hoang Quan Real Estate with the price of over 11 billion. These contracts worth hundreds of billions in Binh Minh Industrial Park (Vinh Long) are in the process of negotiation.

According to Mr. Nguyen Van Be­_ President of IP enterprises in HCM City said: "TPP is still quite early to be able to create powerful positive affects because it takes time so much for member countries to catch. But in the long-term vision, the TPP will bring tremendous value to the industrial real estate. We now have been planning positive strategies retain foreign investors in Vietnam "

                                                                                                      Source: nhipcaudautu.vn