Amid the ongoing global economic uncertainties, Vietnam has attracted new foreign direct investments (FDI) in excess of $20 billion as of September 2023, up 4.5% year-on-year, which indicates that the country’s appeal to international investors has not diminished. Market experts are increasingly optimistic about industrial real estate as the recovery of manufacturing activities is expected to fuel demand for facility rental in industrial zones. Successfully capturing the opportunities arising from the production shift wave as well as the e-commerce market boom, BW Industrial Development JSC (“BW”) has achieved tremendous growth in the recent five years to emerge as the country’s leading industrial real estate platform.
BW was founded in 2018 as a joint venture of Becamex IDC Corp, Vietnam’s largest industrial real estate developer, and Warburg Pincus, a leading global private equity firm which has recently celebrated its 10th anniversary of investing in Vietnam. In an aim to further accelerate growth and consolidate its leading position in the market, in Q1 this year, BW brought in Hong Kong-listed real estate giant ESR Group as its lead strategic investor as part of the primary fundraising round of up to approximately US$450 million that also included other leading investors in Asia.
Leveraging the strengths of the three blue-chip investors, BW is well-positioned to capture the tremendous growth in Vietnam’s logistics and industrial real estate sector which offers significant opportunities driven by the favorable macro tailwinds and the underserved market.
According to experts, the country continues to be one of the top economies in Southeast Asia, with its robust macroeconomic fundamentals and strategic policies. Furthermore, Vietnam’s fast-growing economy is underpinned by a thriving digital economy, a burgeoning middle class, and a young and dynamic workforce.
With the e-commerce market, the engine of Vietnam’s digital economy, expected to grow at a more than 20% CAGR until 2025 (e-Conomy SEA 2023 report), e-commerce-dedicated logistics space in Vietnam clearly has the potential to grow more than 2 million square meters in the near- to mid-term to meet the rising demand, BW observes.
Enquiries increase more than 70% since the beginning of this year according to BW
While inquiries from global manufacturers and e-commerce players have been growing rapidly with an increase of 75% since the beginning of this year, Vietnam is currently faced with limited supply to accommodate the anticipated surge in operational demand and new trends in the field of warehousing logistics.
Mr. Lance Li, CEO of BW, remarked, “Vietnam is significantly underserved in terms of its modern warehouse supply, especially institutional-grade warehouses. At its current stage, the per capita modern warehouse stock in the country is a mere fraction of that of neighboring countries like China and Korea. The modern warehouse industry, therefore, enjoys favorable tailwinds, driven by outsized opportunities in manufacturing, increasing domestic consumption, the rapid growth of e-commerce, and trade activities that are outpacing regional peers.”
Vietnam is significantly underserved in terms of its modern warehouse supply, said BW CEO
Making significant strides
BW has delivered strong results over the last five years owing to the favorable factors that have opened up ample room and numerous possibilities, cementing its position as Vietnam’s top industrial logistics real estate platform. BW owns a remarkable portfolio which comprises over 8.5 million square meters of industrial land in prime locations under control across 40 projects in 11 key provinces in Vietnam, with over 3 million square meters of gross floor area (GFA) of completed or under-construction properties.
As a developer, BW has demonstrated incredible speed in executing its projects. As of November 2023, the company has successfully completed nine of the ten projects that are slated to be launched by December 2023. Additionally, BW has pioneered the market in terms of leasing performance. Its properties are leased to both local and global tenants through its vastly experienced and multilingual sales force, with successful pre-leasing and high occupancy. Of particular note are the projects in the North region, which have recorded almost full occupancy rates.
Since its inception, BW has developed entrenched relationships with close to 250 high-quality tenants from over 20 countries, majority of which are e-commerce, last-mile delivery, and resilient high-tech manufacturing players such as Shopee, BEST Inc., 7-Eleven, HKC, Chervon, and RPAC.
Among the product types offered by BW, ready-built-factory (“RBF”) is occupied vastly by electronics manufacturers which indicates that Vietnam’s manufacturing industry is moving up the value chain. While RBF accounted for a bigger share among the products, ready-built-warehouse (“RBW”) has recorded a faster annual growth rate in the past three years.
As of Q1 2023, BW has secured equity commitments of more than US$1 billion from its investors and partners and has formed strategic partnerships with leading global manufacturers, e-commerce, and logistics players to serve one of the fastest-growing markets in Asia.