Foreign Investors Change The “Taste” Of Investing In Real Estate Of Vietnam

For foreign investors, the residential segment remains the most attractive. However, investors are now moving into the commercial real estate segment.

According to foreign experts working in the field of real estate in Vietnam, investment trends are particularly focused on the A-class office projects with a favorable location, growth potential in capital value and investment yield (7 – 8%).

Foreign investors find that office rents in Vietnam are much higher than in other countries in the region, reflecting supply shortages. In addition, investors also show special interest in hotel projects.

The challenge of investment is still clean

Talking to reporters, foreign real estate consultants in Vietnam, JLL said that for housing and commercial projects, foreign investors often look for “clean” land. These are the land for the completion of the compensation and clearance procedures, payment of land use fees, land use rights and good development plans. However, such projects are rare, because the real estate market in Vietnam is still young.

According to HoREA, Resolution 42 will contribute to the launch of a clean land fund, in particular, to strengthen credit operations and effectively handle security assets.

In addition, the market is still under strict control, projects with good potential for development are relatively scarce. Access to good projects is relatively limited. Therefore, most foreign investors often seek the support of professional consultants to enter the market.

Foreign investors choose the investment

The real estate market in Vietnam is receiving a lot of strong interest from foreign investors, expecting this trend will continue in the coming time.

In particular, foreign investors always favor projects that generate profits. However, these projects are still limited in the market.

Currently, the real estate market witnessed many cooperation and joint ventures between local companies and foreign investors.

Foreign investors pouring capital into Vietnamese real estate through M & A are considered a safe option. While foreign investors are financially strong and experienced, domestic investors hold land in the market as well as have close relationships with local authorities.

Therefore, this handshake will make the cooperative product fully exploit the advantages and minimize the disadvantages. M & A is also considered to be the safest door for foreign investors when it first pours into a new market.

Overall assessment of the market, the real estate segment is still growing momentum as expected. There are hundreds of millions of dollars waiting to be poured into the Vietnamese real estate market in most segments, including housing, offices, retail, hotels and industrial parks.

HCMC Real Estate Association said that real estate enterprises are having difficulty creating new projects due to the lack of clean land.

Investors mostly come from different countries such as Japan, Korea, Singapore, and there is a growth of investor groups from China such as CFLC, Country Garden, Jiayuan, etc.

It is forecasted that in the near future, the hotel segment will be of interest in the past with many foreign capitals poured into Vietnam.

JLL forecasts that this trend will continue to grow while other markets such as the industrial and educational sectors are also growing.

In addition, the popular housing market is considered as a segment that attracts a lot of investment capital, largely thanks to the rise of the middle class.

Another signal suggests that more can be expected in FDI inflows as the number of foreign investors entering and establishing offices in Vietnam is increasing.

Instead of moving constantly, investors now have developed their staffs in Vietnam right by the combination of local and international experts and managers for each project.

In general, Vietnam is still attracting strong attention from investors in the region, M & A activity in Vietnam is expected to record a new record in 2017 and 2018.

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