Markets & Prices

Last updated: Thursday, April 18, 2019


Vietnamese Real Estate Attracts Foreign Investors

Posted: Wednesday, April 03, 2019

Vietnamese real estate in 2019 will attract a huge amount of foreign capital, say many experts.

In the first two month, foreign investors poured US$8.5 billion into Vietnam, increasing by 2.5 times over the same period of 2018, according to Ministry of Planning and Investment. Nearly US$500 million came from the real estate sector, accounting for nearly 6% of the total capital. In 2018, Vietnam attracted more than US$30 billion of FDI, of which more than US$6.5 billion was invested in real estate, accounting for 21.3%, ranking second in FDI attracting sectors.

Mr. Nguyen Tran Nam, former Deputy Minister of Construction, predicted that in 2019, the real estate market will receive a strong cash flow, and there will be stable movements in the different segments, in which the affordable segment continues to be the dominant type of market. In addition, the supply of the market will be according to the plans and strategies of enterprises, so there will be no excess supply and prices will continue to be stable. Speculation has decreased markedly, there will be mainly customers who have real needs.

According to economic expert Dinh The Hien, investment should be spread in areas which will see high population density in the future and booming accommodation service. Population density is the key factor which determines the rise and fall of real estate value. It is not necessary to be an area with a large population, but it may be an area with a large density of tourists and temporary residents.

However, this form is mainly for investors who have strong capital capacity and must wait a long time for these real estate projects to generate profit. Otherwise, investors should channel their investment cash flow into the existing urban projects such as 1-2 room apartments and officetel for rent, which will bring long-term stability. Particularly for those who want to seek high profit value from buying and selling quickly, the best option for them is definitely the segment with land plot under VND2 billion.

In addition, according to some experts, new types of real estate applying 4.0 technology such as timeshare vacation, room accommodation service Airbnb, coworking office and officetel will continue to compete with traditional types and will attract large amounts of investment in the coming time.

Mr. Le Hoang Chau, President of Ho Chi Minh City Real Estate Association, said that the new trend is Chinese investors getting involved in buying and selling, and transfering Vietnamese real estate. This will bring huge resources for the development of the market; however, it is necessary to have strict control over this matter.

The report by Jones Lang LaSalle (JLL), the leading U.S. group of professional real estate management and investment services, revealed that Chinese real estate investment in Vietnam market spread across all segments, from houses, office for rent, industrial zones to tourism real estate. It is forecast that the M&A deals in the real estate sector of Chinese partners will continue to be active, especially in the housing market. The most popular is Dai Phuoc Lotus project - the acquisition of VinaCapital and China Fortune Land Development (CFLD) from China, Thu Thiem River Park between Hong Kong Land and CII, projects adjacent to Long Thanh International Airport between CFLD and Tin Nghia Group, the South Hoi An Casino project being acquired by Chow Tai Fook Group (China) with US$4 billion. The general data also showed that the flow of capital from China into Vietnam has a strong year-on-year growth, and has especially boomed in the last six years.

Anh Phuong

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