Geopolitical instability in the Middle East: Industrial real estate benefits (by Bao Dau Tu)

Escalating geopolitical tensions in the Middle East are increasing risks to global trade and supply chains. However, these disruptions are simultaneously reinforcing Vietnam’s position as a stable and attractive investment destination in Asia, thereby supporting the medium- and long-term growth outlook of its industrial real estate sector.

Most international investors have already factored geopolitical risks into their strategies. As a result, current tensions are expected to exert primarily short-term pressure, notably through rising transportation, input, and production costs, while accelerating the long-term trend of supply chain diversification toward more stable markets such as Vietnam.

David Jackson, CEO of Avison Young Vietnam, emphasized that if geopolitical tensions continue to escalate, global trade and supply chains will inevitably face disruptions. This could lead to higher logistics, raw material, and production costs, thereby fueling inflationary pressures across multiple economies, including Vietnam. At the same time, his perspective suggests that such instability paradoxically enhances the appeal of resilient economies. Vietnam benefits from a combination of political stability, strong economic growth, increasingly open investment policies, and an improving legal framework, all of which strengthen investor confidence.

Other experts broadly agree that recent geopolitical developments, particularly involving major global powers, were largely anticipated by investors. Capital allocation decisions had already been adjusted in advance, limiting immediate shocks. Instead, the current environment reinforces structural shifts already underway, especially the “China + 1” strategy and the push for supply chain diversification.

Vietnam’s neutral geopolitical stance and its strategic role in global manufacturing relocation continue to position the country as a safe and sustainable hub for foreign direct investment (FDI). As global manufacturers prioritize supply chain resilience, Vietnam is increasingly viewed as a risk-mitigation destination. This influx of FDI is expected to directly benefit industrial real estate developers, particularly those with large, ready-to-lease land banks and well-developed infrastructure.

At the same time, investor preferences are evolving. Beyond traditional factors such as cost and land availability, tenants are increasingly prioritizing high-quality infrastructure, logistics connectivity, digital readiness, environmental standards (ESG), and operational reliability. This trend is expected to drive demand toward well-planned industrial parks with ready-built facilities and comprehensive services.

Furthermore, the supply side is undergoing transformation. Developers are under pressure to upgrade industrial ecosystems, incorporating smart infrastructure, green development standards, and integrated logistics solutions to remain competitive and capture higher-quality FDI inflows.

Read the full article here (in Vietnamese)