More foreign capital inflows in industrial properties through M&As
07/06/2019 10:41 | Source: Vneconomic Times
Foreign investors are pouring capital into Vietnam's industrial real estate market through merger and acquisitions (M&As), with the CPTPP to have a strong impact on this investment trend.

In January this year, Gaw Capital Partners partnered with NP Capital Partners to launch the $200 million Gaw NP Industrial fund, which will invest in industrial properties in strategic locations in Vietnam to meet strong demand from export and import businesses and companies servicing booming e-commerce and new retail activities. 

Co-founder and CEO of Gaw NP Industrial, Vo Sy Nhan, said: “Gaw NP Industrial looks forward to harnessing the soaring demand for high-quality warehouses, ready-built factories, and built-to-suit facilities through its strong project pipelines as well as through M&A opportunities.”

Real estate consultanting firm JLL’s recent report showed M&A activities in Vietnam’s real estate market have resulted in many major deals in recent times, with industrial real estate M&A activities emerging sharply. Improving the business environment and market transparency has made Vietnam’s industrial real estate market more attractive to foreign investors, said market observers.

More foreign capital inflows in industrial properties through M&As
A corner of the Vietnam - Singapore Industrial Park (VSIP) Nghe An

Last November, Mapletree Logistics Trust (MLT) spent VND725.1 billion ($31.5 million) on acquiring warehouses from Unilever Vietnam. The Unilever VSIP Distribution Center is a Grade A logistics facility located at the Vietnam - Singapore Industrial Park 1 (VSIP) in Binh Duong. Upon completion of the acquisition, the property will be leased to Unilever Vietnam for ten years with annual rent increases. The acquisition adds Unilever, a global leader in fast-moving consumer goods (FMCG), to MLT’s tenant network. 

A representative from Mapletree pointed out: “The addition of this facility, MLT’s fourth property in Vietnam, will enhance our ability to tap into the rising demand for quality logistics facilities in one of the region’s fastest-growing markets with strong domestic consumption.”

In May 2018, Warburg Pincus and industrial real estate developer Becamex IDC Corp also officially launched a joint venture, BW Industrial Development JSC (BW Industrial). With more than 200 ha of projects under development and initial investment of more than $200 million, BW Industrial is now the Vietnam’s largest “for-rent” industrial and logistics developer.

Notably, CRE Inc., which is one of Japan’s largest management companies specializing in real estate properties for logistics operations, agreed to invest $6.2 million in Sembcorp Infra Services (SIS) in a share subscription agreement through its subsidiary CRE Asia. The new capital from CRE Asia and bank borrowings will fund the development of an additional 30,000 sq m of warehouse space in Vietnam by SIS. 

Meanwhile, the 100 per cent foreign-invested Schindler Vietnam Co., Ltd., belonging to the Jardine Schindler Group (Switzerland), in Jannuary signed a land sublease contract with the Hiep Phuoc Industrial Park JSC (HIPC) in HCMC to build a 10,000 sqm manufacturing factory. 

Stephen Wyatt, General Director of JLL Vietnam noted: “M&A activities are growing in Vietnam’s industrial real estate market, a sign that institutional investors are continuing to increase their allocations to the segment.”

Besides, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has a range of impacts on the foreign investment wave to the real estate market in general and industrial real estate in particular. Mr Nhan added: “Vietnam is an ideal destination for foreign investors thanks to the free trade agreements the country is party to, like the CPTPP.”

According to property analysts, with the aim of eliminating tariffs on goods among member countries, stipulating a number of commodities in the framework of the CPTPP is an important factor helping Vietnam’s real estate market become more attractive. This also encourages corporations from other countries to select the country as a source of raw materials for factories, warehouses and business facilities.