CBRE has just released the results of a survey conducted in the last two months of 2023. The survey asked about the intentions and plans of investors in the Asia-Pacific region in 2024. The results showed that Vietnam ranked second among emerging markets prioritized for investment, only behind India. Thailand took the third position.
The survey received over 500 responses from institutional investors with various questions related to investment plans, views on challenges in the near future, coping strategies, market sectors, and countries to prioritize investment in the coming year.
The results showed that the Vietnamese market has a unique context, where investment portfolios consist of rare income-generating assets that are usually not widely available for sale on the market. Most investors in Vietnam focus their attention on industrial and office real estate.
“Vietnam’s strong economy and focus on exports have driven the development of commercial activities and created a strong demand for efficient supply chain management and logistics. Investors recognize the potential from these drivers, so they are very interested in industrial real estate,” stated CBRE’s report.
In addition to commercial real estate, residential project development land in Vietnam continues to attract strong interest from domestic and foreign investors.
Residential project development land in Vietnam continues to attract strong interest from domestic and foreign investors.
Many investors actively seek discounted assets or assets owned by landowners facing legal difficulties or capital constraints. This trend highlights the recovery potential and attractiveness of the residential segment in Vietnam.
Mr. Nguyen Pham Anh Duy, Head of Investment Advisory of CBRE Vietnam, commented that investors have a long-term vision for the potential of Vietnam’s economy and are ready to invest capital that can benefit from the recent price adjustment cycle.
“This is especially true given the current situation where buyers benefit from existing investors in the market who need to divest after holding assets for a certain period of time,” said Mr. Duy.
The survey also highlighted that more than 60% of foreign investors plan to upgrade prime buildings in their investment portfolios to ESG (Environmental – Social and Corporate Governance) standards in 2024. The majority of these investors are private equity funds, real estate funds, and real estate investment trusts (REITs). This is also a trend to pursue asset value enhancement strategies.
Overall, CBRE assesses that the demand for real estate project acquisitions in the Asia-Pacific region is still weak, while the supply is high. Investors in most markets, such as Japan, will continue to adopt a wait-and-see approach in the first half of 2024.
Within the region, the central bank’s policy interest rates and economic instability are the top two concerns for investors in 2024, although these concerns have significantly decreased compared to last year.
The top three challenges in sourcing financing for real estate investment activities in the Asia-Pacific region include a poorly defined or disparate loan-to-value ratio, increased borrowing costs for new loans, and uncertain interest rate fluctuations.
