South Korean FDI into Vietnamese Real Estate Increases

In May, many countries, including the US, Japan, South Korea, and Viet Nam joined discussions on creating a new economic initiative in the Asia Pacific. 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. In the first five months of 2022, South Korea ranked second with an investment capital of over US$2.06 billion, representing a 12.6% year-on-year (YoY) increase.

With 112 new projects so far in 2022, South Korea had the greatest share or 19.4%. It also contributed the most additional capital.

Manufacturing and Processing Leads

In February 2022, Samsung was granted permission to expand its project, Samsung Electro-Mechanics Vietnam Co., Ltd, by US$920 million, pushing the total investment from US$1.35 billion to US$2.27 billion. The factory in Thai Nguyen manufactures and assembles components and parts for telecommunications equipment, high-tech mobile devices, and other electronic products. Before 2017, more than 70% of South Korean FDI went into manufacturing and processing. By November 2021, this reached 74%.

Mr Andrew Lee, Senior Manager, Korean Desk Business Development, Savills Viet Nam, commented: “Industry in Viet Nam is moving up the value chain and high-value industries are increasingly evident. Many South Korean companies working with high-value-added goods like electronics and high-tech equipment have invested in the Northern Key Economic Zone (NKEZ). Notable brands include Samsung, Lotte and YSL Group. However, more traditional industries like textile manufacturing tend to be in the Southern Key Economic Zone (SKEZ).”

Korean Investors Take to Real Estate

Real estate is increasingly popular with South Korean investors. The proportion of investment reached 13% by the end of November 2021.

Andrew comments: "The 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. We expect an increase in the number of 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. 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.

Logistics real estate is popular with South Korean investors, especially those looking to develop cold storage or smart warehouses.

Andrew adds: “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. 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.”

Our Services: Savills Industrial Department

Further reading:

• Viet Nam moves up the value chain
• How Did The North Key Economic Zone Perform In 9M/2021