S. Korean investment into Viet Nam property market increases
“The COVID-19 pandemic limited South Korean investors as they could not physically visit properties. However, international flights resumed in March, which means investors can now travel freely to Viet Nam and expand their business activities," said Andrew Lee, Senior Manager, Korean Desk Business Development, Savills Viet Nam.
"We expect an increase in Korean real estate projects this year.”
There have been several notable investments this year. Lotte E&C invested US$900 million into Lotte Eco Smart City Thu Thiem, and YSL Group is implementing a 300-hectare industrial project in Nam Binh Xuyen, Vinh Phuc Province.
Thanks to its focus on sustainability, Nam Binh Xuyen Green Park is set to be a leading investment destination for domestic and foreign businesses in Vinh Phuc, according to Savills Vietnam.
Logistics real estate is popular with South Korean investors, especially those looking to develop cold storage or smart warehouses.
Viet Nam's real estate is increasingly popular with South Korean investors. The proportion of investment reached 13 per cent by the end of November 2021.
“Viet Nam is an ideal destination for businesses that wish to diversify their profile and avoid being dependent on one country in the supply chain," Lee said. "Localities close to international borders and transport links like ports are attractive investment destinations."
"Viet Nam’s improving investment environment also motivates South Korean investors to boost capital inflows into real estate.”
In May, many countries, including the US, Japan, South Korea and Viet Nam, joined discussions on creating a new Asian-Pacific economic initiative. The discussions led to the creation of the Indo-Pacific Economic Framework (IPEF), which will create opportunities for Viet Nam within the region.
Trade between Viet Nam and South Korea continues to thrive. In early 2022, the Ministry of Finance hosted a conference with the Korean Embassy and the Korean Chamber of Commerce to discuss tax and customs policies and administrative procedures. Both countries decided to amend the Double Taxation Agreement to improve trade flows.
According to the Ministry of Planning and Investment, since 2020, South Korea has been one of the leading FDI source countries. Manufacturing and processing investments have accounted for most South Korean deals.
In the first five months of 2022, South Korea ranked second with an investment capital of over $2.06 billion, representing a 12.6 per cent year-on-year increase.
With 112 new projects in 2022, South Korea had the greatest share or 19.4 per cent. It also contributed the most additional capital.
“Industry in Viet Nam is moving up the value chain, and high-value industries are increasingly evident," Lee said.
"Many South Korean companies working with high-value-added goods like electronics and high-tech equipment have invested in the Northern Key Economic Zone. However, more traditional industries like textile manufacturing tend to be in the Southern Key Economic Zone.”