According to international real estate consultancy companies, Vietnam has been becoming an attractive destination for many foreign investors thanks to encouraging investment policies, political stability and fast -grow economy.
In particular, the real estate market continues to receive lot of interest and has attracted a large amount of foreign direct investment (FDI).
According to the Foreign Investment Agency, there has USD 21.93 billion FDI capital invested in Vietnam in the first 7 months of 2017, up 52% over the same period of 2016.
By the end of July, the cumulative capital of foreign capital invested projects was estimated at USD 163.9 billion. In which, the sector of manufacturing and processing has the highest rate of USD 181.81 billion, followed by the real estate sector with USD 51.67 billion.
Motivation promoting real estate development
Assessing about this source, in the report on the investment status in Vietnam (published on August 18), Savills said that the increase in FDI capital mainly in processing and manufacturing sector has promoted the development of industrial infrastructure. This is proved by the official confirmation on the joint venture to set up an industrial park worth USD 1 billion on 3,200 hectares of land in Nghe An on May between Hemaraj Land & Development of Thailand and Cienco 4 of Vietnam.
In addition, FDI also contributes to the growth of other segments in the real estate market. For example, Nishi Nippon and Hankyu Company have cooperated with Nam Long to build Mizuki Park residential area project with an area of 26 ha in Binh Chanh District, Ho Chi Minh City with a total investment of 351 million USD.
Aeon Mall Corporation officially has co-operated with BIM Group to develop a second shopping center in Hanoi with an area of 16.7 ha. The estimated total investment is about USD 200 million.
Son Kim Land has also just successfully called for fund worth USD 100 million to develop projects from Japanese investors.
China Fortune Land Development Group has bought shares in Lotus Dai Phuoc project of VinaCapital for USD 65.3 million. Dai Phuoc Lotus is a residential area project with total area of 198.5 million hectares in Dong Nai province, bordering Ho Chi Minh City.
In addition, 65% of share from Times Square Complex (Hanoi) worth USD 41 million has also transferred to Elite Capital Resources Limited….
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Hundreds of millions of dollars will be poured into Vietnam
Talking about the above mentioned trend, JLL Company said: Vietnam’s real estate market strongly attracts foreign investors, mainly through M & A activities. Joint ventures are becoming more popular among foreign investors – those have strong financial capacity and rich experience, with local corporations – investors possess land in the market as well as have close relationships with local authorities.
As observed by JLL, hundreds of millions of dollars is expected to be poured into the domestic market in most segments, including housing, offices, retailing space, hotels and industrial parks. Investors come from countries like Japan, Korea, Singapore and the growth of investor groups from China.
“In 2017 and the following years, the real estate market is expected to continue to be dynamic with a series of merge and acquisitions trading. Hotel segment always attracts attention during the past time with large amount of foreign capital poured into Vietnam.
We forecast that this tendency will continue to develop, while other markets such as the industrial parks and educational facilities continue to develop. The affordable housing market is considered as the leading source of investment capital, largely thank to the increase in number of of the middle class, “commented by JLL representative.
Meanwhile, Mr. Ben Gray, Director of Capital Market Investments Department, Cushman & Wakefield Vietnam analyzed: “We have found that legal system in Vietnam is constantly changing to be better and better. So far, it is on the right direction and is continuing to support foreign businesses wishing to invest in Vietnam.
However, real estate is still a conditional field and if a foreign business wants to develop on its own land, it may take a long time to be able to obtain operation license. This is also the same when they want to buy a completed project directly.
Therefore, many foreign corporations cooperate with Vietnamese investors on the basis that the two parties can provide their profession and contribute relevant skills to make a quality product. In the time ahead, this tendency will become popular as there is probably that foreign investors want to transfer capital into the Asia-Pacific region, including Vietnam, to make profit. “
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