Geopolitical upheavals in the Middle East are having a significant impact on the global economy, spreading to inflation, monetary policy, and investment sentiment. In this context, real estate, particularly industrial real estate, stands out as a sector clearly affected, given its close ties to global production flows and supply chains.
World: Energy prices, inflation, and the "wait-and-see" mentality
According to Savills' analysis, energy prices are currently the most direct and noticeable factor impacting the economy. When oil prices rise, input costs increase, leading to inflationary pressure and a decline in consumer purchasing power.
Data from developed economies shows that energy costs typically account for 5-10% of the inflation basket. For every 10% increase in oil prices, overall inflation could rise by 0,1 to 0,3 percentage points. Notably, global oil prices have already increased by approximately 40% since the beginning of the year.
However, this impact is not uniform across regions. The US, as a net energy exporter, is better able to absorb price shocks. Meanwhile, economies heavily reliant on energy imports, such as Europe and the Asia-Pacific region, face greater risks.
Economies like China, Japan, India, and South Korea are significantly dependent on oil and gas transported via strategic shipping lanes, with the Strait of Hormuz playing a particularly crucial role. Any disruption in this area could lead to soaring shipping costs, disrupting global supply chains.
.jpg "With oil prices rising by 40%, how will this impact Vietnam's industrial real estate market?")
In this context, manufacturing businesses are forced to confront shrinking profit margins as logistics and raw material costs escalate. This is fueling a trend that has been emerging since the pandemic: restructuring supply chains to shorten distances, diversify production locations, and reduce reliance on a single region.
Simultaneously, expectations regarding global monetary policy are also changing. Rising inflationary pressures are leading central banks to tend to maintain high interest rates for longer periods, increasing the cost of capital and directly impacting investment decisions.
For the real estate market, the most noticeable consequence is the emergence of a "wait-and-see" mentality. According to Savills, this is not a sign of declining demand, but rather reflects a short-term adjustment in expectations. In reality, after each shock, the market usually needs time to establish a new equilibrium before recovering.
How has Vietnam been affected?
In this global context, Vietnam is not immune to the effects, but the impact is primarily indirect, primarily through costs and supply chains. Troy Griffiths, Senior Advisor at Savills Vietnam, believes the biggest short-term pressure will come from logistics and transportation costs as energy prices rise. With a highly open economy heavily reliant on international trade, Vietnam will find it difficult to avoid these spillover effects.
Nevertheless, it is noteworthy that the market's internal strength is still demonstrating relatively good resilience. In the Southern key economic region, approximately 25.700 hectares of industrial land are being developed with an average occupancy rate of about 90%.
In particular, in localities such as Binh Duong, Dong Nai, and Ho Chi Minh City, this rate has even exceeded 90%, indicating that the demand for industrial land leases remains stable despite external fluctuations.
.jpg "With oil prices rising by 40%, how will this impact Vietnam's industrial real estate market?")
Current geopolitical shifts are inadvertently highlighting long-term opportunities for Vietnam. As multinational corporations intensify their “China+1” strategies and seek alternative destinations, Vietnam is emerging as a balanced option in terms of cost, geographical location, and trade connectivity.
According to Troy Griffiths, Vietnam's industrial real estate market is entering a more mature phase, where competition is no longer based on low prices but on quality and sustainability. The rapid increase in industrial land prices in recent years has also contributed to changing the market structure, forcing investors to raise development standards to meet the demands of high-quality capital flows.
In the short term, the cautious sentiment of global investors may cause trading to slow down, similar to the general trend in the region. But in the long term, fundamental factors such as infrastructure investment, manufacturing growth, and the increasing role in regional supply chains are still expected to continue driving the market.
Current geopolitical shifts may not be enough to alter the trajectory of development, but they serve as a "test" of each nation's adaptability.
For Vietnam, this is not only a challenge but also an opportunity to reposition itself in the global value chain. In particular, industrial real estate is entering a new cycle, serving not only as a "support" for production but also as a measure of the quality of economic growth.
Source: CafeLand Electronic Newspaper
