RoK injects huge capital into Vietnamese real estate sector

The proportion of RoK FDI into the local real estate sector doubled in 2018 from the previous year and has continued to rise over recent years. By the end of last year, it continued to record an increase of 13% compared to 2020.

Andrew Lee, business development senior manager at the Korean Desk of Savills Vietnam, said the COVID-19 pandemic has limited the commercial activities of RoK investors as they cannot directly access real estate projects in the nation.

However, the country’s resumption of international flights from the first quarter of the year has created favourable conditions in which RoK firms can now return to Vietnam and seek investment opportunities to expand in the market.

He analysed that there will be several real estate projects in the country that can enjoy investment capital sources from the ROK in the future.

According to the expert, the Vietnamese market has recently seen greater FDI inflows from a number of Korean investors, including Lotte E&C that injected US$900 million into developing a smart urban area named "Lotte Eco Smart City Thu Thiem".

Furthermore, the RoK’s YSL Group has been also implementing an industrial land project with an area spanning roughly 300 hectares in Nam Binh Xuyen of Vinh Phuc province, with the site anticipated to attract many domestic and foreign enterprises, especially Korean businesses in the future.

Savills Vietnam assessed that logistics and warehousing are the industrial properties that typically receive huge investment from Korean businesses, with a specific focus on the development of cold storage and smart warehouses.

As a result, the Vietnamese market can be viewed as an ideal destination for foreign firms that are keen to avoid overreliance on a single country in the global supply chain, he said.

He added that with advantages of geographical location near borders, port systems, developed transport infrastructure, and improved investment climate, the country is projected to attract additional capital inflows into the real estate sector from Korean investors moving forward.

Currently, the RoK is one of the largest foreign investors in the Vietnamese market. According to statistics compiled by the Ministry of Planning and Investment, the past three years has seen the RoK consistently among the top three countries with the highest amount of FDI inflows into the country.

Most notably, during the five-month period, the RoK ranks second among countries investing in Vietnam with over US$2.06 billion, up 12.6% against the same period from last year.