FDI – The “Lever” of the Office Leasing Real Estate Segment in Vietnam

DNHN - Recent times have witnessed a significant increase in foreign direct investment (FDI). This is a strong “lever” for the office leasing real estate segment in Vietnam.

Currently, the office leasing real estate segment is one of the sectors that is developing strongly in Vietnam. With the impressive increase in FDI, this segment has benefited greatly from the investment flow from foreign companies. This growth not only creates new opportunities for the real estate market but also contributes to the country’s economic development.

With the influx of FDI, foreign investors have contributed to the construction and upgrading of urban infrastructure. This includes the construction of modern office buildings and the provision of advanced amenities such as air conditioning systems, security systems, and support services.

With the increase in the number of high-quality office buildings, FDI has created opportunities for high-quality office leasing for foreign companies and domestic enterprises. This increases competition and raises the standards of office leasing real estate in Vietnam.

In addition, the increase in FDI has created an increase in the value of office real estate in Vietnam. With the increasing demand for office space and the scarcity of supply, rental prices have increased, creating attractive returns for investors.

Which, FDI not only benefits the office real estate segment but also creates jobs for local workers. The growth of this segment has created many job opportunities and contributed to promoting economic growth and sustainable development in Vietnam.

In recent years, Vietnam has emerged as a leading attractive investment destination and will continue to grow positively in 2024. Statistics from the Foreign Investment Agency (Ministry of Planning and Investment) show that in 2023, the disbursed capital of foreign investment projects (FDI) is estimated to reach about 36.6 billion USD, an increase of 32.1% compared to the same period in 2022. Accordingly, Hanoi attracted 2,943 million USD of FDI capital with 408 new FDI projects licensed with a total registered capital of 441 million USD, continuously in the leading group in the country in attracting FDI.

In particular, the processing and manufacturing industry group has always been dominant in terms of FDI investment with more than 14 billion USD, accounting for 69.3% of total investment capital and an increase of 15.5% over the same period in just the first 9 months of 2023.

Troy Griffiths, Deputy Managing Director of Savills Vietnam, said that the FDI investment flow into Vietnam is showing many promising opportunities, especially in the manufacturing sector. Improvements in infrastructure development, administrative procedure reforms, and investment in innovation centres in Vietnam are also contributing to making the market more attractive to international investors.

Commenting on the tenant trend, Ms Hoang Nguyet Minh, Senior Director, Commercial Leasing Department, Savills Hanoi said that Gia Lam District is a special area in terms of business lines, so the tenant structure is relatively different compared to the Hoan Kiem area, which focuses on enterprises in finance, banking, government organisations, or the Western Hanoi area with a high density of companies in the fields of information technology, insurance, and real estate. With the advantage of the area, Gia Lam District will attract FDI enterprises or multinational companies with factories located in neighbouring industrial parks.

With convenient inter-provincial connectivity and synchronously invested infrastructure and technical infrastructure, Gia Lam District will soon become an important link in the supply chain and production and business activities between domestic and foreign enterprises in the capital and provinces in the economic gateway of the capital.

Savills’ recent Market Overview Report noted that manufacturing tenants had the most transactions, accompanied by the largest total leased area; followed by tenants in the information technology, finance, insurance, real estate, and education sectors.

Thus, FDI has been an important lever for the office leasing real estate segment in Vietnam. The increase in foreign direct investment has created significant opportunities and benefits for this market. Strengthening infrastructure, creating opportunities for high-quality office leasing, increasing real estate value, and creating jobs have contributed to the development of the office leasing real estate sector and the Vietnamese economy. With strong growth potential, this segment will continue to attract investment and contribute to the country’s development in the future.

Nhan Ha Phan