| Peter Trinh, managing director, NAI Vietnam |
The government’s determination to improve the investment environment has fuelled strong confidence among foreign investors. A potential wave of mergers and acquisitions (M&As) is in the making when foreign investors are actively exploring the market. Vietnam’s industrial and office real estate are becoming appealing amid the current global economic landscape, creating momentum for the commercial segment.
In 2025, commercial real estate M&As have investment yields from 5 to 8 per cent, an attractive rate in the Asia-Pacific region. High-yield margins indicate that investors expect better returns in Vietnam, cushioning the risks in emerging markets. In fact, transaction costs for Ho Chi Minh City-based office buildings are significantly lower than those in developed cities in the region, which is a catalyst to attract foreign investors.
According to the Foreign Investment Agency, the commercial real estate sector attracted $5 billion in foreign direct investment (FDI) in the first five months of 2025, capturing 27 per cent of the total and doubling over the same period last year. The surge in FDI revolves around M&A deals and expansion ventures, underscoring investor confidence in the market’s long-term potential.
Foreign investors from China, Japan, and Hong Kong continue to secure a stronger presence, contributing to diversifying capital flows. They not only bring in capital and experience but also adopt high standards to elevate Vietnam’s commercial real estate market.
In addition, there is ample potential for M&As in Vietnam’s industrial real estate market. In the 2020-2024 period, the market was vibrant with high-value deals, especially in 2022 and 2023. As industrial real estate attracts significant interest from both local and foreign investors, it signals a growing trend of M&As.
The country boasts advantages in maritime trade and logistics due to its strategic location with a long coastline on a busy international maritime axis and along important shipping routes in Gulf of Tonkin and the East Sea. Given its proximity to China, Vietnam has become the priority destination in the China+1 strategy for global manufacturers to diversify supply chains.
Vietnam also actively engages in a wide range of free trade deals, paving the way to major markets. As a result, Vietnamese-made products are more competitive than those of Thailand or Indonesia in terms of tariffs.
Another advantage is competitive labour costs and a young workforce. Vietnamese workers are also quickly improving their productivity and skills to meet the requirements of high-tech manufacturing.
On top of Vietnam’s competitive edge, the government has issued attractive tax and land incentives for investments in industrial parks (IPs) and economic zones. Normally, businesses are entitled to corporate income tax exemption for two years and a 50 per cent reduction for four subsequent years when implementing a new venture in IPs. Many high-tech ventures are subject to a preferential tax rate of 10 per cent for 15 years, tax exemption for four years, and a 50 per cent reduction for nine subsequent years. The synchronous incentive policies help foreign investors easily plan long-term business.
Vietnam’s real estate market is awaiting a major breakthrough in 2025. However, there are some challenges, including prolonged and complex legal procedures.
There are some challenges, including prolonged and complex legal procedures. According to the Real Estate Association, at one point, about 70 per cent of projects were struggling due to legal obstacles like land, licensing, and fire prevention. Thousands of projects have been delayed or suspended over the past few years, which leads to a shortage of primary supply. It is difficult for foreign investors to secure assets with clear legality. Transparency and approval procedures remain the biggest barriers to investors.
Also, despite the rise of green real estate, the market faces a shortage of projects meeting the environmental, social, and governance standards. The majority of office buildings and shopping malls have yet to receive green certifications.
There are very few factories and warehouses meeting the environmental standards and energy efficiency. Due to the scarcity of green supply, Vietnam is at risk of losing its appeal to eco-conscious investors. Foreign tenants are relocating to new office buildings with green certificates, leaving vacant premises in old, substandard buildings.
The market is in the transition phase, so investors are forced to upgrade their assets towards environmental friendliness, otherwise at risk of losing tenants.
Vietnam’s real estate is transitioning into a dynamic growth phase, driven by robust and diversify investor’s appetite. However, unlocking the market’s full potential will require addressing persistent structural challenges, notably in legal transparency and sustainable development.