Despite uncertainties in the global economy, Vietnam is predicted to maintain strong economic growth in the medium term as exports rebound and the country continues to gain benefits from the shift in global supply chains to Southeast Asia’s manufacturing hubs.

In October, Prime Minister Pham Minh Chinh also said that GDP in 2023 will reach over 5%, lower than initital target. Earlier, the Asian Development Bank (ADB) adjusted its growth forecast for Vietnam from 6.5% in April to 5.8%. While this adjustment reflects the impact of global economic uncertainties, it is important to note that Vietnam remains the fastest-growing country in Southeast Asia.

“The ability to sustain positive growth in a turbulent global environment underlines the resilience and potential of the Vietnamese economy,” experts of BW Industrial Development JSC (BW) said.

According to the General Statistics Office, Vietnam’s GDP growth in the initial nine months of 2023 was recorded at 4.24%, signaling a deceleration when compared to the same period in 2022. While this may raise concerns, a deeper examination of the quarterly statistics unveils an optimistic pattern. The GDP expanded by 3.28% in the first quarter, 4.05% in the second quarter, and 5.33% in the third quarter.

Export, which has been a crucial contributor to its GDP, also saw a sharp fall this year as well. However, there are positive signs as quarter-over-quarter growth showed an encouraging trend, with Q2 witnessing an 8.1% increase compared to Q1, and Q3 achieving a growth rate of 10.3% compared to Q2.

The aforementioned numbers show a decrease year-over-year, but a remarkable growth is seen when comparing them on a quarterly basis. “This suggests resilience and adaptability within Vietnam’s export sector and implies that the economy is steadily building momentum,” the experts of BW stated.

The BW’s experts also indicated the flexibility of Vietnam in terms of the shift in growth drivers from export to domestic consumption and service activities. In detail, F&B and accommodation services (13.17%); logistics and warehouse (8.66%); wholesales and retails (8.06%) business lines displayed strong growth.

The positive signals of domestic consumption accelerated the demand for warehouses, factories, and logistics real estate like those developed by BW, which has established relationships with over 270 tenants from more than 20 countries in the e-commerce, last-mile delivery, or high-tech manufacturing sectors.

BW is Vietnam’s leading for-rent logistics and industrial real estate platform. It is a joint venture between Warburg Pincus – the leading global growth investor; ESR Cayman Limited – the largest APAC focused logistics real estate platform; and Becamex IDC, a pioneer developer of large-scale industrial townships in key markets across Vietnam.

Currently, BW owns a remarkable portfolio which comprises 8.5 million square meters of industrial land in prime locations under control across 48 projects in 11 key provinces in Vietnam, with over 3 million square meters of gross floor area (GFA) of completed or under-construction properties.

Fion Ng, chief operating officer of BW spoke at the Mingtiandi Singapore Forum in November that supply chain diversification remains a top priority of BW’s customers. “Being the largest for-rent logistics as well as industrial real estate platform, we experienced a significant increase of 75 percent in leasing inquiries year to date. We continue to see very strong demand despite the softening of the export orders that we all hear about. That has led to very good occupancy on the ground – occupancy of nearly 95 percent for our stabilized assets.”

Fion Ng, chief operating officer of BW spoke at the Mingtiandi Singapore Forum

Echoing Ng’s opinion, experts from Savills pointed out that 2023 recognized the development of industrial real estate sector. Savills observed a rise in enquiries and site visits from global manufacturing, logistics, and e-commerce companies, which is indicative of the rising demand for industrial real estate.

In 2023, there were 397 industrial parks (IPs) established nationwide with a total land area of ​​122,900 hectares, according to a Savills’s recent report. The IPs have a high occupancy rate of over 80%, of which key northern provinces reach 83% and key southern provinces reach 91%.

In order to meet the increased demand of tenants, BW is on track to deliver 10 new projects totaling 1 million square metres this year. “This year, the star performer is the manufacturing sector. We see that supply chain diversification continues beyond this year into the next couple of years,” Ng added.