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Vietnam’s property market is likely to get a second round of tonic from global companies diversifying their production bases in the region as the coronavirus outbreak exposes the concentration risk in China.
The Southeast Asian nation stands to benefit as the exodus from “the world’s factory” accelerates, burnishing its appeal as an alternative to China since the likes of Apple, Samsung and their suppliers switched out to limit the damage caused by higher tariffs in the US-China trade war.
Analysts say industrial and residential property in the capital Hanoi and Ho Chi Minh City
(HCMC) are likely to get another tailwind after the pandemic lockdown disrupted supply chains and escalated trade and political tension between China and other economic powerhouses.
“This is forcing many companies to re-evaluate their supply chain strategy,” said Sunny Hoang Ha, sales director at SPG Land Viet Nam, part of a group that controls Greenland Hong Kong Holdings. “Vietnam is primed to benefit.”
Occupancy rate in the industrial district in Vietnam’s northern region, which includes Hanoi and Haiphong, rose 200 basis points to 72 per cent on average in the first quarter from end-2019, according to consultancy JLL. The increase was supported by fundamental demand, before tapering from February amid the pandemic, it added.
The expected arrivals of expatriates and factory workers could also give the local residential market a much-needed fillip, according to PropertyGuru. The pandemic and the recession depressed demand by 18 per cent in the first quarter, with property listings falling 28 per cent in the same period. “With the influx of foreign industrialists, they will need accommodation for both the foreign staff as well as local staff who might have come from other provinces,” said Jeremy Williams, chief business officer at PropertyGuru, which operates the Batdongsan.com.vn portal. “The residential segment will see an increase in demand, hence providing an uplift to prices.”
Analysts are watching if Japan’s latest move will instigate a rush to Vietnam and elsewhere. The government last month unveiled a US$2.2 billion fund to pay its manufacturers to move out of China, stricken by a breakdown in supply chain following lockdown measures in January to stem the viral outbreak.
Source: scmp.com
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