Gaw NP Industrial, a real estate investment fund jointly set up by Hong Kong-based Gaw Capital Partners and Vietnamese realty developer NP Capital Partners, expects to fully deploy its $200 million capital in the next two years.
Launched in 2019, Gaw NP Industrial invests in industrial real estate that serves export-import businesses, and e-commerce and retail activities in Vietnam.
“Within the next two years, with favourable conditions, we will have projects that match our investment criteria and deploy the entire $200 million fund. We are seeking investment opportunities in Hanoi’s neighboring provinces such as Hung Yen, Hai Phong, and Bac Ninh,” the fund’s co-founder and managing director Vo Sy Nhan told DealStreetAsia.
He was speaking on the sidelines of the inauguration of the fund’s first project at GNP Yen Binh-Industrial Center, on Thursday. The 13-hectare GNP Yen Binh centre is located in Thai Nguyen city, north Vietnam, and offers premium ready-built factory spaces. It is expected to be operational in the first quarter of 2021.
According to Nhan, the outlook for the logistics real estate sector looks promising thanks to the fast pace of e-commerce growth in Vietnam. The fund has forged strategic partnerships with e-commerce company Tiki and logistics company Giao Hang Nhanh.
Parallelly, foreign investments into Vietnam are set to increase following the Europe-Vietnam Free Trade Agreement, and Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Nhan said.
Gaw Capital Partners, a real estate PE fund with a $36 billion global portfolio, has been eyeing Vietnam for a few years now.
In 2015, the firm acquired four projects — Indochina Plaza in Hanoi, Hyatt Regency Danang, and two land development projects in Danang and Ho Chi Minh City — held under Indochina Land Holdings 2 Ltd, a Vietnamese investment fund, for $106 million.
The acquisition was through a specially created fund, Gaw NP Capital Vietnam Fund I, launched in partnership with NP Capital for residential and hotel real estate. This was a landmark move for Gaw, as, till then, it had little exposure to Vietnam, with only one mixed-used development project — Empire City in Ho Chi Minh City through its Gateway Real Estate Fund III.
In August this year, Gaw Capital closed two investment vehicles with $900 million in total capital commitments. One of the vehicles will focus on real estate opportunities in Asia across sectors, while the other will invest in education platforms in major Asian cities, the company said.
In June, Gaw Capital and SoftBank Ventures Asia co-led a $25 million Series A round in Vietnamese property technology startup Propzy.
Other investors, such as Sydney-headquartered LOGOS Property, too, are in the logistics real estate market. BW Industrial — a $200 million joint venture between Warburg Pincus and Vietnamese property developer Becamex IDC — was the first platform for logistics real estate acquisitions set up in 2018.
Most recently, on October 15, Singapore-based PE firm GLP and SEA Logistic Partners (SLP) announced a joint venture to invest in, and develop, modern logistic real estate assets in Vietnam.
In an interview with DealStreetAsia, Nhan talked about competition from the foreign firms, and the fund’s investment plan. Edited excerpts:
How significant is the GNP Yen Binh project for Vietnam’s industrial real estate market?
With the recently-signed bilateral investment and trade agreements, we have confidence that Vietnam will attract more regional manufacturing plants. Our business strategy in Vietnam is suitable for industrial property. Gaw Capital Partners will continue hunting for land plots for our pipeline developments in the country.
GNP offers premium ready-built-factory (RBF) spaces, which will be tailored to suit the requirements of first-class tenants,. It is located within one of the country’s leading industrial zones at Thai Nguyen, which has attractive investment policies and proximity to key freight routes.
What assets are attractive to Gaw NP Industrial, and why?
We are interested in projects that are not too small in scale. We also focus on projects that are relatively suitable for a $200 million investment in the first phase. In the past two years, we researched investment locations and input costs, and finally decided to develop GNP Yen Binh, our first project in the north.
Why is Vietnam a good investment opportunity for investors in the logistics and industrial sectors?
Vietnam has a favourable geographical location and can become a logistics and industrial service hub for the [Southeast Asia] region. However, it takes a lot of time to become a logistics hub because it requires land planning, synchronous infrastructure, and connection with urban areas etc. Although there are many things that need to be improved, there is an opportunity for domestic and foreign investors to anticipate the wave of investments and movement of production enterprises.
Moreover, in the future, e-commerce in Vietnam will develop. We have worked with a number of e-commerce units in the country and signed cooperation agreements with them.
The logistics industrial real estate sector has recently witnessed participation from foreign investors such as LOGOS Property, GLP, Warburg Pincus. Is there a risk of overpaying for assets, owing to the competition?
Every sector has competition. For investors like Gaw, we have a desired rate of return. Therefore, for large-scale investors like us, and some recent large investors, we want to develop Vietnam with a long-term vision. Just one or two projects is not our investment strategy. We want to develop many locations with suitable infrastructure connections in the Vietnam market.
How does Gaw NP Industrial differentiate itself from other logistics funds?
We have local experience and the ability to process quickly. We have a team with extensive experience in project development capabilities not only in industrial real estate but also in other complex real estate sectors. This is an important factor because Vietnam is an emerging market, and there are many legal corridors, and issues related to landowners, technical barriers, and administrative procedures for each region.
How much of an impact has COVID-19 had on the industry, for example in terms of business model, or operations, demand, manpower considerations?
We look at the long term. Of course, in the short term there will be a certain impact, in particular, investment exchange activities are more difficult due to social isolation, so the investment decisions take more time. In general, though, the signal is still positive from investors.
In your view, how will the industry need to evolve post-pandemic?
There is only one path. That is to grow stronger, more modern, and more concentrated.