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Savills: EVFTA to focus spotlight on industrial property

Released at: 18:17, 05/07/2019

Savills: EVFTA to focus spotlight on industrial property

Photo: Savills Vietnam

Industrial segment expected to attract greater attention from investors under EVFTA.

by Hong Nhung

A landmark agreement seen as a significant boost to industry and exporters in Vietnam, the recently-signed EU-Vietnam Free Trade Agreement (EVFTA) will ultimately see 99 per cent of tariffs on goods removed, with local industrial parks and zones to become even more under the investment spotlight, according to Savills Vietnam.

All real estate sectors are expected to be lucrative for investors, while industrial real estate will likely receive the most attention thanks to the relocation of factories from China and Vietnam’s recent signing of multinational trade agreements.

EU investors are showing extensive interest and the move towards a more transparent investment environment will further amplify Vietnam’s reputation. However, recent US steel tariffs against Vietnam-based producers from South Korea and Taiwan show export provenance is under increasing international scrutiny.

“More good news for Vietnam’s real estate market,” said Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam. “This underlines government commitment to establishing Vietnam as the go to manufacturing destination in Asia. Inevitable increases in trade will see more FDI, jobs and opportunities in every property sector.”

Mr. John Campbell, who leads Savills Industrial, confirmed that EU enquiries had increased in anticipation of the deal being ratified. “By enabling the latest production technologies to be set up here and increasing workforce training, the government is actively easing business fears of viability, labor shortages, and rising costs,” he said. “Moving to a more transparent business environment will help mitigate investor concerns and improve quality standards.”

Another recent report from CBRE Vietnam also found that industrial parks will continue to thrive. Occupancy rates of between 70 and 90 per cent will remain standard, as infrastructure connectivity will play a larger role in occupiers’ location decisions.

The good times are expected to continue with the right governmental support, business incentives, and corporate interest. For the remainder of 2019 and all of 2020, industrial property supply across Vietnam is seen to benefit from production shifts from China, CBRE’s report noted.

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