Foreign confidence in real estate abounds
VET sought the opinions of real estate experts about FDI in the sector.
VET sought the opinions of real estate experts about FDI in the sector.
Mr. David Jackson, CEO, Colliers International Vietnam
The foreign investment wave into Vietnam, particularly in the last year, is testament to the potential of the country in general and its real estate industry specifically into the foreseeable future. Key players that are unlocking this potential are primarily from the local region, with South Korea and Japan accounting for nearly half of total FDI in 2017, with investments from Japan, South Korea, and Singapore reaching $35.6 billion; the highest since 2009.
International sentiment towards Vietnam seems to be warming, in part due to its emerging economy and in part due to the relaxation of government legislation towards foreign investment into the real estate sector. There has been growth in strategic partnerships between foreign (and locally-partnered) developers and local governments for projects of this nature nationwide, and therefore we predict that this recent wave of foreign investment is just the beginning.
Evidence shows that the government is in fact continuing to incentivize FDI through legal changes. It is recommended, however, that this is implemented diligently in order to maintain stability.
Overall we predict a prosperous real estate market in the forthcoming years, particularly from the international community.
Mr. Ben Gray, Director, Capital Markets Group, Cushman & Wakefield Vietnam
We are seeing continued sustained interest from foreign investor groups looking to place capital into the market as they seek to drive returns from our relatively high yielding real estate. Institutional capital has made its mark in the listed and unlisted domain. When these large players come into the market, they do so with long investment horizons, expressing confidence in the fundamentals of Vietnam having made calculated bets on our continued growth and expansion.
The local market will continue to expand, driven primarily by Vietnam’s well-told demographic story. The purchasing power of the middle class is increasing, as is wage growth and job stability. Retail loans are on the increase as banks look to lend more to buyers, which all leads to a positive outlook for the affordable and lower mid-end sector.
It can be argued that capital markets act as an indicator of pressures to come for the real estate market. The market needs greater transparency on land title, ownership, pricing and taxation. The government would do well to legislate and codify the process for the renewal of land title held before or as it tenure reduces below 20 years and it would also do well to complete its review of land transfer pricing, which we hope will be completed this year.
Dr. Kida Tetsuo, General Director, Maeda - Thien Duc Company Ltd.
I think demand for real estate in Ho Chi Minh City will continue in 2018. District 2, where our Waterina Suites project is located, is being developed and made more convenient, so the potential of our project remains high. One of the positive signs is improvements in infrastructure. There are, however, also some negative signs for the rapid growth of the real estate industry. The government requires banks reconsider financing to real estate projects by conducting deep screening. This will be a hindrance in the real estate industry. Vietnam’s high-end real estate market will have the main role in the industry, because people chase quality of life with convenience. We can learn the lessons from the process of development elsewhere in Asia.
The possibility of a bubble in Vietnam’s economy is not serious but does already exist. Although many investors tend to believe that economic growth will simply continue without easing, a recession is surely part of the economic cycle. Vietnam needs more developments to reach semi-developed country status, by utilizing foreign investment, so any bursting bubble will not happen in the near future.
I recommend the State set a one-stop service point for FDI, to smooth the completion of procedures. It takes a lot of time to obtain permission from the government, to which we must submit many types of applications to different departments. This makes many foreign companies hesitate before investing.
Mr. Troy Griffiths, Deputy Managing Director, Savills Vietnam
A good macroeconomy has supported positive domestic growth in Vietnam and FDI continues to be strong. It’s been a very healthy start to 2018 with solid performances across all asset classes. We’re now moving to the next part of the cycle, with lower entry-level investors actively engaging in residential markets. With primary residential stock being low, recent apartment launches have quickly filled their foreigner allocations.
Challenges remain, such as the lack of liquidity and the opaqueness of the market. Greater transparency and better overall health in the market are key variables. Continued reform to the legal system so that domestic and foreign investors have confidence and protection is critical. The continued drive to good governance through effective business and anti-corruption measures promotes international interest.
Vietnam is well positioned to leapfrog traditional markets through fintech platforms that could have great benefits for property markets. Without legacy systems and with a young, savvy and ambitious startup culture, the opportunities to embrace technological advancements are many. The government has a raft of initiatives, decrees, and circulars to support this, but the competition from regional peers is immense.
VN Economic Times
- Competence to approve investment policies (02/04/2021)
- National Assembly To Relieve Top State, Government Leaders (02/04/2021)
- Around US$700-million-worth Vietnamese Goods Stuck In Suez Canal (31/03/2021)
- Nearly 40,000 People In 19 Localities Vaccinated Against COVID-19 (29/03/2021)
- GDP Expands Nearly 5% In Q1 Despite COVID-19 Pandemic (29/03/2021)
- GE signs agreements with EVNGENCO 3 to boost largest power plants in Vietnam (28/03/2021)
- Textile FDI down but poised for strong growth: experts (28/03/2021)
- Trade surplus exceeds US$17 bln (26/03/2021)
- Highlights of Government’s Workload and Performance in 2016-2020 Period (26/03/2021)
- Gov’t Chief Holds Phone Talks With Chilean President (26/03/2021)
- Malaysian news portal appreciates Vietnam’s FDI attraction (26/03/2021)
- Malaysian news portal appreciates Vietnam’s FDI attraction (22/03/2021)
- HCMC to get four Japanese-built metro trains in summer (18/03/2021)
- Environmental admin procedure costs surge 39 pct (18/03/2021)
- HCM City: Real estate most attractive to foreign investors in first two months (15/03/2021)
- VN - bright spot in FDI attraction (12/03/2021)
- RoK becomes largest investor in VN (12/03/2021)
- HSBC: VN’s GDP growth poised to rebound 8.1% in 2021 (04/10/2020)
- Gov't has been active in luring high-quality FDI inflows (28/09/2020)
- ADB: Growth in corporate bonds in VN reaches 76% by end of June (28/09/2020)
- Viet Nam has golden chance to attract investment from Europe (29/07/2020)
- EuroCham speaks at the ASEAN Forum on Sub-Regional Development (21/07/2020)
- [EuroCham Webinar] Decision 13 – Final FIT for Renewable Energy in Vietnam (23/04/2020)
- THE SITUATION OF ATRACTTING FOREIGN INVESTMENT IN THE FIRST 3 MONTHS OF 2020 (19/04/2020)
- Key infrastructure projects calling for investment in HCMC (08/07/2019)
- Bac Ninh licenses 116 FDI projects in seven months (22/08/2018)
- Binh Phuoc licenses 24 projects worth $1 billion (22/08/2018)
- Hue targets $56mil in investment this year (15/08/2018)
- Hanoi seeks approval for Vingroup’s $300 million IT park (31/07/2018)
- List of Project Calling For Investment in Lam Dong Province in 2018 (31/07/2018)
- Kien Giang calls for investment in 12 resort projects (31/07/2018)
- Decree amendments open paid TV firms to foreign investment (30/07/2018)
- Vietnam: Opportunities in the Waste-to-Energy Sector (24/07/2018)
- Can Tho City seeks investment for 54 projects worth $5.4 billion (20/07/2018)
- Hoa Lac High-tech Park aims for $1 billion investment in 2018 (19/07/2018)
- Large-scale undersea tunnel to be constructed next year (19/07/2018)
- Investment Plan: SAIGON HUONG NAM RESORT (23/09/2020)
- OVERVIEW OF THE NORTHERN REGION (16/09/2020)
- OVERVIEW OF THE SOUTHERN REGION (15/09/2020)
- A project of specialized factories for manufacturing ICT - DITP ICT accessories (08/08/2020)
- THU THUA INDUSTRIAL ZONE (15/01/2020)
- Map of industrial parks in Vietnam (23/07/2019)
- 493 Projects Invested in Nghi Son Economic Zone and Industrial Zones (09/02/2018)
- Thai Binh Strives to Attract Investment Capital of VND 5000 billion in Industrial Parks and Economic Zones (07/02/2018)
- Vinh Phuc Adds 4 New FDI Projects in Industrial Zones (07/02/2018)
- Dung Quat EZ and Quang Ngai IPs Attracted 258 Projects with a Total Investment Capital of More Than US$ 11 Billion (30/01/2018)
- Solutions to attract Investment Capital into Industrial Parks in Bac Giang Province (19/01/2018)
- Nghi Son Economic Zone and Industrial Zones Received 66 new Investment Projects (08/01/2018)