Vietnam presents opportunities for corporate real estate

Changes in governmental policies and economic expansion in Vietnam have paved the way for growth in corporate real estate (CRE). However, the profession is still nascent in Vietnam, according to CoreNet Global’s new report Vietnam: A New Asian Tiger, which examined the challenges and opportunities in Vietnam.

CRE will ultimately see an upswing in demand for its talents and services, according to the report. As of now, however, CRE and facilities management are not widely understood in the local market and are typically viewed as property management services, which are transactional or building engineering services focused. The strategic aspect of CRE is not yet appreciated and many issues are still dealt with on a small and local scale. “The fact that CRE is quite low on the evolutionary stage in Vietnam means that not many of the aspects of CRE that are seen as common in the rest of the world are applied here,” according to the report.

“For example, green buildings are still not very common in Vietnam, though this might change with a greater influx of MNCs into the country .... One concept that seems to have taken off and is expected to see gains is the notion of co-working. There are numerous co-working spaces in Vietnam, with Ho Chi Minh City seeing a flurry of activity and increased usage in this sector.”

The potential for dramatic growth in CRE is driven by several facets of economic expansion in the country:

• Vietnam is quickly becoming a lower-cost alternative manufacturing location to China. Intel, Canon and Panasonic have all built manufacturing plants in the country.
• IT outsourcing has seen a rise in interest as well. According to the Vietnam Software Association the industry has been growing by 10 percent to 15 percent every year since 2011.
• While electronics manufacturing and export put Vietnam on the technology map, Vietnam is also attracting investment in other sectors such as shoe and apparel manufacturing. Shoe manufacturer Wolverine Worldwide has moved much of its production into Vietnam.
• Though much of what is manufactured in Vietnam is exported, a burgeoning middle class is now beginning to demand a higher share of what is being produced in the country. Consumer expenditure in Vietnam has grown significantly since 2010 and is estimated to continue its growth pattern.

“Overall, the outlook for Vietnam is positive. A young population, a growing middle class and a government keen on pushing the economy higher are all factors that will influence growth positively. As the economy develops and matures, the need for CRE to provide increasingly strategic guidance will grow as well,” the report concluded.

Download the full report here.