Cash flow moving to Vietnam
William Young, MIPIM ASIA high ranking project director, affirmed at the press conference introducing the annual Asia-Pacific real estate summit and the international real estate trade fair MIPIM ASIA 2011, that the capital is pouring to Vietnam instead of other developed markets in the region.
William Young, from Hong Kong, believes that one of the reasons which help Vietnam remain a good destination for real estate investors in 2011, is the liquidity.
“If looking at the Vietnamese market, one can see that there are still many opportunities for foreign investors which promise good profits for them,” he said.
“I think that after five years, or just two years, the market will clearly show its attractiveness in terms of liquidity,” he continued.
The real expert gives the comments in the context of the rising prices in other regional countries. Developed markets including Hong Kong, China mainland and Singapore have strongly recovered after the shock caused by the collapse of the US Lehman Brothers bank in the 2008 crisis.
The recovery has made real estate products in the markets become too expensive, which has prompted investors to pour their money to neighboring markets, or European and American countries. Especially, they can see positive opportunities in Vietnamese market.
“I believe that Asian investors are paying high interests in the Vietnamese market,” he said.
The games of marathon athletes
The latest report about Vietnamese market released by CBRE Vietnam, a real estate service provider, said that the black clouds shadowing nearly all the market segments now in Vietnam do not mean the losses to all the investors who join the market at this moment.
CBRE Vietnam believes that there are still many opportunities for investors in the market, which can be described as gems can be found in stones.
Richard Leech, Managing Director of CBRE, said that in Hanoi, a lot of real estate projects have to halt because of the lack of capital, but this is really the opportunity for other projects whose investors are more financial capable.
It is expected that more than 30,000 apartments would be launched into the market in 2011. However, in the long term, the supply would become short in the segments of high end apartments, high grade offices and hotels.
Also according to CBRE, the profitability level in Vietnam is very high, while the leasing fee is being paid in dollars. The current difficulties will weed out short term and small investors, while marathon athletes will survive and earn fat profits.
Commenting about foreign direct investment in Vietnam’s real estate, Marc Townsend, General Director of CBRE once said that the investors from South Korea, Singapore, Taiwan and Malaysia have begun to return to Vietnam since 2010. It is partially because the Philippines, Thailand, Singapore and Hong Kong have become no more attractive.
The foreign investors, for example, had to spend 15,000 dollars per square meter to build a building on Robinson road in Singapore and they can earn the profits of three percent. Meanwhile, if investing in Vietnam, the profitability would be up to 20 percent.
It is true that Vietnam is tightening the monetary policies which have blocked the capital flow to the real estate sector. However, CBRE believes that the real estate market has still been supported by the government policy on making investment to develop infrastructure.