According to a panel of top executives speaking at Mingtiandi's second Singapore Focus Forum on Tuesday, supply chain shifts are creating opportunities in Southeast Asian logistics assets as manufacturing and consumption growth boost demand for sheds, factories, and logistics facilities.
According to Fan Li, a partner at Warburg Pincus in Singapore, Vietnam and Indonesia's industrial property markets are following a growth model similar to more developed Asian economies like China, Korea, and Singapore, who sees improved infrastructure and rising foreign direct investment, as well as geopolitical dynamics, accelerating supply chain migration from North Asia to Southeast Asia.
"They (manufacturers) are in a much tighter supply chain today in that they are required to put up their operations as soon as possible, which actually plays very well into how we play, which is renting and providing institutional service for these manufacturers," said Fan, who was instrumental in the development of industrial behemoth ESR more than a decade ago. "There is a very strong desire for market participants to meaningfully upgrade supply chains there."
Fion Ng, chief operating officer of Ho Chi Minh City-based BW Industrial, and Kevin Kow, chief executive officer of Jakarta-based NWP Property, joined Li on stage. Warburg Pincus has invested in both companies.
Manufacturing in Vietnam is Booming
Diversification of global supply chains, increased foreign direct investment, and a thriving manufacturing sector have increased demand for factories and warehouses like those developed by BW Industrial, which bills itself as Vietnam's largest and fastest-growing pure-play industrial developer, with over 40 projects in over 30 locations.
"When we speak with our customers, they tell us that supply chain diversification is still a top priority." On the ground, as the leading for-rent logistics and industrial real estate marketplace, we have seen a 75 percent rise in leasing requests year to far," said Ng. "Despite the recent softening of export orders, we continue to see very strong demand." This has resulted in very high occupancy on the ground, with approximately 95 percent occupancy for our stable assets."
In 2018, Warburg Pincus and Vietnamese state-owned builder Becamex IDC Corp formed a joint venture that now has a land bank of over 8.5 million square metres and 3.1 million square metres of gross floor area in operation or development. The organisation has relationships with approximately 270 tenants from more than 20 countries, the majority of whom work in e-commerce, last-mile deliveries, or high-tech manufacturing.
In January, ESR, a Hong Kong-listed industrial real estate fund manager and developer, took a strategic position as the lead strategic investor in a main fundraising round of up to US$450 million that included other significant Asian investors.