Vietnam and Indonesia to see largest gains in friendshoring

Vietnam and Indonesia to see largest gains in friendshoring

Friendshoring, a strategy focusing on political and economic allies, is reshaping Asia Pacific's property market.

Vietnam and Indonesia are set to become the key players in global supply chains as these countries will reap the largest gains in friendshoring, an emerging trend in the property market.

In a recent report, Savills, a leading global real estate services provider, mentioned that the restructuring of global supply chains is significantly impacting the Asia Pacific, with China remaining a major player but facing challenges like rising labor costs. 

Paul Tostevin, Head of World Research at Savills, pointed out that Vietnam and Indonesia are likely to benefit the most from friendshoring, especially in labor-intensive and low-margin industries. As foreign companies, including giants like Apple, show a notable slowdown in establishing new facilities in China, these Southeast Asian nations emerge as attractive alternatives.

He said that other markets, including Malaysia, Indonesia, and India, are also poised to benefit from the friendshoring trend.

“We're seeing similar advantages and incentives elsewhere. And it's worth looking at it isn't just going to be low cost manufacturing that will be shaped by this trend. We're seeing very strategic sectors like semiconductors, also being impacted. And that's going to benefit many markets across the region, including those slightly higher cost ones, but have those that have the skills base to support those industries,” he said.

Paul explained that friendshoring, the strategic alignment of production and supply chain networks with countries considered political or economic allies, is gaining momentum in the wake of challenges such as the US-China trade war, the global pandemic, and geopolitical tensions in regions like Ukraine.

“Now we're in a kind of new era of strategic competition. And that's fueled by domestic growth, ambitions, and national security concerns. And that's really leading to new government incentives to bring manufacturing closer to home, either through onshoring, or increasingly, friendshoring,” he said.

He mentioned that governments are actively supporting friendshoring through policies such as tax incentives and local content requirements which helps drive domestic investment.

‘In the US, you've got the Inflation Reduction Act, that's providing tax incentives to firms investing in clean energy manufacturing, electric vehicles, and that's also driving domestic investment. At the same time, you've got local content requirements that are boosting the appeal of Mexico in the context of North America. And that's a good example of friendshoring. And this is certainly a global trend,” he explained.

Tostevin emphasized that the friendshoring trend will reshape the demand for different types of properties in the Asia Pacific market as the intricate nature of semiconductor production, influenced by friendshoring, is expected to boost logistics demand, requiring significant supply chain expansion.

“It equates to boosted logistics demand across all levels, from sort of mineral suppliers through to material and testing companies. And these organizations have to either expand the industrial and logistics real estate or invest in some sort of third party logistics companies,” he said.

The report estimates that key markets in Asia Pacific will witness a scale of expansion similar to that in Europe and the US. Tostevin highlighted the need for associated uses such as worker housing and retail amenity space, indicating a positive boost across all levels of the real estate sector.

Follow the link for more news on

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!


How Metland Indonesia deals with weaker residential purchasing power
The real estate firm continues to expand with residences that are attractive to consumers because of pricing, the ‘growing house’ concept, and sustainable features.