ESR has joined forces with a Warburg Pincus-backed industrial platform to develop and own an industrial park near Ho Chi Minh City, marking the Hong Kong-listed warehouse giant’s first project in Vietnam.
My Phuoc 4 Industrial Park will have 240,000 square metres (2,583,339 square feet) of logistics and light industrial facilities upon completion, ESR said in a Monday press release. The site is north of Vietnam’s largest city in the industrial hub of Binh Duong.
If the joint venture with BW Industrial Development obtains regulatory approval, ESR will become the latest warehouse builder to stake a claim in Vietnam’s lively logistics market.
“We are excited to cooperate with BW on the development and management of high-quality logistics and light industrial facilities in this prime location, given BW’s leading presence and reputation in the market,” said Michael de Jong-Douglas, senior managing director of ESR. “We view Vietnam as an important market in ESR’s strategy and we look forward to welcoming our customers to My Phuoc 4.”
My Phuoc 4 Park is scheduled for completion in August 2021. ESR said it would work with BW on the leasing of the park, leveraging its strong roster of customers.
BW bills itself as Vietnam’s largest and fastest-growing logistics and industrial real estate developer, with over 5 million square metres of prime industrial land under control in 25 projects nationwide.
Like ESR, BW was co-founded by US private equity major Warburg Pincus. BW’s chief executive, Lance Li, previously served as vice president of mergers and acquisitions and international business at ESR China.
Li identified the e-commerce boom as a positive tailwind driving demand for logistics real estate in Vietnam. Revenue from e-commerce in the country is estimated to have reached $7 billion in 2020, up 46 percent from the year before, according to a report by Google, Temasek Holdings and Bain and Company cited by ESR.
“As the Vietnam industrial and logistics property sector is entering a strong cycle of growth, BW is focused on continuing to be a pioneer in the market and accelerating our growth trajectory on the back of both greenfield developments, acquisitions and joint ventures,” Li said. “We believe that the firm is well positioned to capture the increasing opportunities as the demand for industrial spaces continues to grow.”
Welcome to the Party
ESR’s maiden investment in Vietnam logistics follows last year’s moves by two key rivals in the region that are competing to grab a slice of the growing market.
In October, just two months after establishing a joint venture to expand its Asia Pacific logistics network into Vietnam, Sydney-based Logos Property acquired its first site in the country.
The Australian warehouse specialist chose a plot outside of Hanoi to start building its first distribution centre, with plans to develop a facility spanning up to 80,000 square metres of warehouse space and having an expected asset value of $70 million upon completion.
Also in October, Singaporean logistics titan GLP formally announced its acquisition of two sites in northern Vietnam and a third near Ho Chi Minh City in the south, with plans to develop 210,000 square metres of logistics facilities alongside local affiliate SEA Logistic Partners.