Vietnam is attracting interest of investors in both
domestic and foreign market. Overall, investor confidence was returning to the Vietnam real estate market. Both buyers
and sellers have enhanced activity in recent months.
The real estate market of
Vietnam has overcome
the recession period within 4 or 5 years ago but in the last 12 months, the
market has recovered and noted positive signs as well as confidence in the
market in general.
Law on housing and real estate
business Law takes effect in July 2015 and has acted quickly and positively on
the real estate market in
Vietnam. The changes in the Law on housing have significantly eased
the regulations on home ownership for foreigners, although there are still some
limitations.
“Hot spots” of FDI
inflows
According to a recent report of
Jones Lang LaSalle Vietnam (JLL), a series of free trade agreements such as TPP, EU and ASEAN will further
promote the medium and long term development. Interest rates and inflation rate
have declined significantly and became more stable in the past two years,
helping the investment activity to occur more positive in both Ho Chi Minh City
and Hanoi. With some domestic and foreign investors such as
CapitaLand and Keppel Land, they have spurred the construction activities
thanks to the growing revenue in the last 12 months.
Accordingly, the amount of
disbursed FDI in the period from January to September of 2015 rose by 8.4%
compared to the same period last year, reaching 9.7 billion USD. This is the
strongest growth since the late 1980s, contrary to the slowdown of the Chinese
economy. The amount of registered capital of new investors also rose even more
sharply with 11 billion USD, focused primarily on the manufacturing industry,
in which the energy and electronics industries are the sectors with the highest
registered capital investment in the year, followed by the real estate sector.
According to the Ministry of
Planning and Investment, FDI investment in the industrial park in Vietnam
accounted for 67% of total FDI in Vietnam with 11 billion USD and accounting
for 59% of the total 1,400 projects in the first 9 months of 2015. A notable
transaction is the event that Amata Corporation acquired the land worth 279
million USD in Long Thanh (Dong Nai) for the purpose of building residential
and industrial areas valued of 500 million USD.
According to JLL, the residential real estate prices in Vietnam maintained an average rate with 2
bedroom apartments, 70 m2, 10 – 15 minutes to reach the central area of Ho Chi
Minh City, which are sold at the price of 1,600 – 2,000 USD/m2, equivalent to
112,000 – 140,000 USD/apartment. When compared with the big cities in the
region, the price is believed to increase significantly.
Who dominated the real estate market of Vietnam?
JLL’s report showed that domestic
investors are boosting investment activity in the real estate market of
Vietnam. The largest real estate
investors in Vietnam are
Vingroup and Novaland Group.
Vingroup is Vietnam’s largest
real estate development and management with market capitalization of about 3.4
billion USD. Vingroup’s investment portfolio includes 45 real estate projects
spread across many sectors of the real estate market, including Vinhomes luxury
apartments and villas; Vincom Center and Vincom Mega Mall; Vincom Office; 5
star Vinpearl resort; Vinpearl Luxury resort….
Novaland Group has participated
in the real estate market in 2007 with the first project is Sunrise City with
investment capital of 500 million USD located on Nguyen Huu Tho road, district
7. The real estatebusiness of
Novaland focused on the apartment complex segment from mid to high classes and
the segment of house land with 25 projects that are being implemented
throughout the downtown districts.
Vietnam is becoming an attractive
place for foreign investment in the medium term than many other countries in
Southeast Asia. Data from Real Capital Analytics (RCA) recorded that there are
more attention from a number of private investment funds that are allocated
foreign capital into Vietnam in an attempt to increase their market presence in Vietnam.
In the 2nd quarter
of 2015, a joint venture of Warburg Pincus – a US investment fund, has invested
100 million USD into Vincom Retail, the Vietnam’s largest trade center ownership and
management in Vietnam. Also in this quarter, Gaw Capital Partners has received
the transfer of 4 real estate projects under various segments from Indochina
Land with a total value of 106 million USD. Gamuda Land has also receive the
transfer of 40% shares (equivalent to 64.1 million USD) in the Celadon City
project, a modern urban area with initial investment by a joint venture between
Sacomreal, Thanh Thanh Cong (TTC) and An Phu Gia.
The current real estate profit margin is high
JLL’s analysis shows that
investors are now enjoying 6 – 7% profitability rate for residential real
estate and 9 – 11% for commercial real estate, depending on location,
completion time, quality of the project and the signing time of the tenants.
According to General Director of
JLL Vietnam, real estate investment in emerging markets has always been
seen as risky investments but with higher potential profits. Investors are
willing to engage in joint venture projects in these markets, where they will
combine with local investors who wish to have capital supporting – in order to
have a foothold in the market before and also experience the exponential growth
in the future when the economy of these market growing fast.
Moreover, the emerging markets such as Vietnam will have the potential growth factors,
including population growth and high urbanization rate. Investors and project
developers can take advantage of these factors.
ANT Consulting is here to assist you from the outset;
providing corporate intelligence, risk advisory, management consulting services that assist
market entrance, and ensure efficient business start-up operation. Our
services are as following:
We strive to save your cost by guiding you towards
economical solutions that comply with local legislation and procedures. We
support you through early logistic solutions and carry you through as your
business grows. We aim to bridge the gap between international best
practices and local cultures and assist foreign companies and organizations
entering Vietnam market to overcome commercial and regulatory issues.
We could be reached at email: ant@antconsult.vn or tel: +848
3520 2779 . To learn more about us, please visit www.antconsult.vn
