US - China confrontation, Vietnam industrial real estate benefit?

29/09/2018   Viewed: 887
In the context of escalating trade disputes between the US and China, investors are very afraid that industrial property will be directly affected.
The United States has imposed a $ 50 billion tax on a range of imports from China, plus $ 16 billion in the second round of entry into force at the end of August. Consumption, thereby reducing the need for warehousing to store goods. This has a direct impact on the type of industrial property.

However, Ryan Livino, chief economist at JLL, said there was little chance of a recession. Investors need not worry too much because this move will hardly hold back the growth of the industrial real estate industry in the world when the e-commerce industry is booming and technology companies are constantly hunting factory. In the first quarter of 2018, the vacancy rate of industrial zones in China kept a record low of 4.8%. In contrast, the tax bar almost pulls real GDP in the United States down by about 10 percentage points over the next 12 to 18 months, leading to a 20 percentage point drop in industrial rent growth.

In addition, the growth in industrial rents in China will boost Vietnam as one of the next destinations for investors, thanks to its favorable geographical location and the cost of labor. Reasonable. Manufacturers are looking to leave China to save production costs, according to the 'China +1' strategy. Trade war will push many big manufacturing companies to come and set up new factories in Vietnam.
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As the US-China trade dispute escalates, Vietnam's industrial real estate will benefit from favorable geographic location and affordable labor costs.

The latest implementation of taxation also has a significant impact on the commercial real estate sector. The strongest hit was construction materials. Tariffs on steel, aluminum and wood - applied in the first three months of 2018 - have increased the cost of construction and will slow down the development of the project. Softwood prices in July rose 19.5 percent from a year earlier, according to the Bureau of Labor Statistics on Producer Price Index (PPI). Prices of pressed wood also increased by 22.5%, steel by 12.4% and aluminum casting by 17.8%. The commercial war is interrupting many projects and delaying many new projects. While new supply is in short supply, existing buildings will increase in value based on the principle of supply and demand, and will also hold back economic growth.

Currently, the Trump administration is considering imposing an additional $ 200 billion in Chinese goods, while China will respond by setting its tariffs at about $ 60 billion from the United States. If the White House applies an additional tax of $ 200 billion, GDP will fall by 50-70% over the next 12-18 months. This will reduce the demand for industrial space, especially in coastal areas, where the import activities are always busy. Industrial rents may also fall by 50-100%. This large-scale tax increase could have serious long-term consequences for the economy and industrial markets.

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