Despite risks, foreign investors still find property market attractive
VietNamNet Bridge - The stable political certainties in Vietnam and high GDP growth rate have created a firm foundation for the next development stage of the real estate market. 


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The latest report by CBRE, a real estate service provider, showed that Australia, Japan and Vietnam are among the most attractive real estate markets in Asia Pacific. 

It says Vietnam still can attract huge foreign investment to the real estate sector despite the existing risks and the underdevelopment of risk insurance products. 

This is because foreign investors target long term investment rather than short-term profits when injecting money into the market. In the long run, they are encouraged by stable GDP growth rate.

Oxford Economics predicted that Vietnam’s GDP growth rate would be 6.65 percent in 2017 and 2018, higher than other ASEAN countries.

The stable political certainties in Vietnam and high GDP growth rate have created a firm foundation for the next development stage of the real estate market. 

However, the revenue from real estate investments in 2012-2016 was $760 million per annum only because of limitations in assets for investment.

According to CBRE, offices for lease and hotels are the two market segments which most attract foreign investors in Vietnam.

The high demand for offices is explained by the startup movement and strong economic development which leads to new businesses and expansion of operating businesses.

The market of offices for lease in HCMC is tighter while in Hanoi there are new supply sources. Both cities will see better development in the time to come thanks to subway systems and infrastructure items.

Meanwhile, the increased number in travelers is the major reason behind the demand for hotel rooms. 

Lang LaSalle’s (JLL) CEO Stephen Wyatt predicted that Vietnam may hit a record number of M&A deals in the real estate market this year.

Gaw Capital has bought a series of commercial assets from Indochina Land at high value, while Gamuda Land has taken over the capital contribution by Vietnamese investors in Celadon City.

Analysts noted that M&A deals have been made in all market segments. Chau Tai Phuc and Suncity have poured money into Nam Hoi An, the huge integrated resort with casino which has the charter capital of $4 billion. The investor from South Korea Lotte has taken over Diamond Plaza.

CapitaLand has announced the purchase of a 90 percent stake of a project in Thao Dien, covering an area of 0.8 hectares to develop 300 apartments.

Meanwhile, Keppel Land has spent $37 million to raise its ownership ratio to 16 percent in Saigon Center project.

In the first half of 2017, Vietnam attracted $19.2 billion worth of FDI.


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Kim Chi

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