The real estate market of Vietnam is experiencing positive transition and signs of recovery. Many segments of the market have sign of recovery. This is gradually regaining the trust of the people and foreign investors, including the investors from Singapore, one of leading trade partners and investors of Vietnam.
The Vietnam Business Forum had an interview with Phan Thanh Mai, CEO of Vietnam Construction Bank and General Secretary of the Vietnam Real Estate Association, about the forecasts as well as investment and cooperation opportunities in the field of real estate between Vietnam and Singapore, which is also the main topic of discussion at the Vietnam- Singapore Business Forum 2014 (VSBF 2014). Thu Ha - Anh Son report.
How do you evaluate the investment situation of enterprises of Singapore in recent years, particularly in the real estate sector?
For years, the bilateral trade relations between Vietnam and Singapore continue to grow strongly. Singapore is also one of the leading trade partners and investors of Vietnam. As of 2013, Singapore had 1,219 direct investment projects in Vietnam with a total of valid registered capital of over US$29 billion. Singapore is ranked 2nd out of 101 countries and territories investing in Vietnam directly.
Singapore now is investing in almost all economic sectors in Vietnam, from exploration and exploitation of oil and gas production and processing industry to agriculture, forestry and seafood, and particularly in the area of the infrastructure, business services and real estate. Besides, Singaporean businesses also participate in the planning stage of the design, housing construction, urban areas, industrial zones, and management.
In 2013, there were two biggest projects, Samsung Electronics Project Vietnam by the Singaporean investors in Thai Nguyen Province with an investment of US$2 billion and an additional registered capital of US$1 billion for Samsung Electronics factory in Bac Ninh Province.
In addition, the Vietnam Singapore Industrial Parks (VSIP) are established on the basis of friendship and economic cooperation between Vietnam and Singapore. It is considered the ideal model for cooperation between the two countries. Currently, there are five VSIPs across the nation with a total of more than 6,000 ha of land including industrial land, urban areas and service areas.
What outcomes have the investment projects of Singapore enterprises in Vietnam brought?
In general, the Singaporean enterprises' projects effectively contribute significantly to job creation, exports and economic growth in Vietnam. For example, the joint-venture project of the international container terminal at VICT in Ho Chi Minh City, and VSIP Binh Duong are the most evident cases to prove the efficiency of the investment of the Singaporean groups in Vietnam.
Other investment projects in hotels, namely Hanoi Tower, Sofitel Plaza in Hanoi, InterContinental Hanoi, Westlake, and Somerset, also have marked the successes of the foreign investors in Vietnam. In addition, the projects in the segment of industrial infrastructure, housing, and urban planning also bring high efficiency and significant contribution to promoting cooperative relations between the two countries.
Besides, at present, a large number of corporations in Singapore in association with Vietnam partners are building social housing, and housing for low-income and average income groups in Vietnam. This is a tendency that fits the current context.
Many investment projects in real estate belong to CapitalLand. After successfully investing in the field of luxury hotels with a series of projects such as Hanoi Tower, Hanoi Sofitel Plaza, Hanoi InterContinental Westlake, and Somerset in Hanoi and Ho Chi Minh City, CapitaLand continued to invest in the field of housing and urban areas with the presence of several condominium projects and luxury villas such as Mulberyland (Mo Lao, Ha Dong) or The Vista (An Phu Ward, District 2 , Ho Chi Minh City).
In early 2014, the Keppel Land (Singapore) also plans to start a joint venture investment to build the Hanoi Westgate urban area, with a total investment of US$140 million. This company currently is conducting 18 real estate projects in Vietnam, with total registered capital of nearly US$2 billion, mainly in the field of housing and luxury apartments. Keppel Land also has reputation in the real estate market with a series of real estate projects in the urban areas in Ho Chi Minh City such as Riviera Point (District 7), Saigon Centre building complex (District 1), and Estella luxury apartments (District 2). Hanoi Westgate project is the first urban project of Keppel Land in Hanoi after three office projects are adopted by this company.
From your perspectives, has the real estate market of Vietnam recovered? And what are the main strong points to attract foreign investors in general and the Singaporean investors in particular in the near future?
In my opinion, the real estate has not recovered yet but it has many signs of positive transition, bringing the hope of the recovery of the property at the end of this year. Currently, the real estate transactions are quite promising, particularly in the low-end segment, in which many transactions come from the projects with large inventories, thereby reducing the inventories and removing difficulties for enterprises. The housing price is being stabilised, which comes from the effectiveness of the social housing program; and this gains confidence of customers and investors in the market.
Regarding the strengths to attract foreign investors, I believe, the real estate market of Vietnam has great potentials to attract foreign investors. The most advantages the real estate market of Vietnam could take over other countries are the high demands for housing, young population, stable economic growth, and low urbanization rate. Especially, Vietnam and Singapore have strong relations and the Singaporean investors have in-depth understanding and penetration in the Vietnamese market. This is the reason why many Singaporean companies have been investing in the real estate of Vietnam.
In addition, from time to time, Vietnam is increasingly opening policies consistent with the investment practices and international business and providing strong supports for the prestigious investors, which help gain the confidences of foreign investors in general and the Singaporean investors in particular in the Vietnam's business environment in long term. The investors will have sufficient conditions to diversify their businesses in different areas in upcoming time.
Another important point is that the real estate of Vietnam has signs of high profitability. It means that a loss of one dollar under the crisis will earn US$5-7 when the market recovers. This is a great attraction for all investors with strong financial capacity.
Vietnamese
