Foreign property investment heading ever upwards

Record levels of foreign investment are now being poured into Vietnam's property sector.

Foreign property investment heading ever upwards

The amount of FDI going to Vietnam’s property sector in the opening months of 2019 paints a bright picture for the real estate market this year. Foreign capital flows since the beginning of the year put real estate as the second-most attractive sector after manufacturing and processing.

Vietnam clearly remains an appealing destination for international developers, given the country’s strong economic growth, rising foreign investment, and booming middle class leading to healthy demand in the market over recent years.

Healthy flow

In the first five months of 2019, foreign capital flows into the real estate sector stood at $1.37 billion, according to the Foreign Investment Agency (FIA). FDI in the sector accounted for 16.7 per cent of the total, behind manufacturing and processing.

The figure has already surpassed the result in 2018 and is the highest ever. Mr. Linson Lim, President of Keppel Land Vietnam, told VET that, over the past few years, the government has taken active steps to strengthen the country’s economy and support enterprise growth.

“We believe that Vietnam’s property market continues to offer long-term growth potential and opportunities for foreign investors, underpinned by continued urbanization and rising income levels,” he said.

Singaporean property developer Keppel Land now has about 20 licensed projects in the country, with total registered investment capital of over $3 billion. It recorded net profit of around $682.4 million last year and sold 4,440 homes, of which 900 were in Vietnam.

It completed the development of the Saigon Centre Phase 2 and opened Estella Place in vibrant District 2 in Ho Chi Minh City, comprising 3.7 ha of gross floor area on five stories, meeting demand for prime office and retail space in the southern hub.

Among other major foreign investors, BW Industrial has been able to secure a total of 230 ha of industrial park (IP) space, with nine projects in five key cities to satisfy the ever-increasing demand for modern logistics warehouses as well as build-to-suit and ready-built factories. It will expand by another 170 ha this year to meet rising interest from customers.

“The trend towards shifting manufacturing from China to Vietnam is presenting many opportunities for industrial real estate developers like us,” Mr. Michael Chan, Head of Sales and Marketing at BW Industrial, told VET. “Our vision in 2020 is to become the number one for-rent industrial developer in Vietnam, with a strong and expanding presence nationwide.”

Another Singaporean investor, Mapletree, has been steadily expanding its portfolio of assets in Vietnam. It unveiled the design of the 27- storey V Plaza twin towers in March, construction of which will start in April next year, with the Grade A office development to have a net lettable area of about 6.6 ha when completed. Over in Ho Chi Minh City’s District 2, its high-end residential property One Verandah has been highly sought after by homebuyers and investors.

Mapletree now has 16 properties around the country, ranging from industrial, logistics, mixed-use developments, hotel, office, residential, and retail to serviced apartments, and more than $1 billion of assets under management.

Ms. Wendy Koh, Regional CEO, Southeast Asia, said Vietnam remains an attractive destination for foreign investors.

Preferred destination

The country is now seen as a hot new market for luxury property thanks to the arrival of more foreign investors, the easing of restrictions on foreign property ownership, and the increasing number of Vietnamese high net worth individuals (HNWIs).

Prices for luxury condominiums in Ho Chi Minh City rose 17 per cent in 2018 to an average of $5,518 per sq m, according to CBRE Vietnam. It forecast that this price will have climbed nearly 10 per cent by early 2020, to $6,000 per sq m, while more affordable offerings in the city only increased 1 per cent last year.

Keppel Land Vietnam presently focuses on offering high-quality upper-middle to high-end residential and integrated mixed-use developments in Ho Chi Minh City that feature innovative and sustainable lifestyle concepts.

With rising affluence, homebuyers are becoming more discerning and are on the lookout for quality properties with strong value offerings in prime and upcoming locations belonging to reputable developers.

“We believe that well-located properties with strong attributes, such as having a river frontage, a wide range of facilities and amenities, quality finishes, and a thoughtfully-designed and spacious layout, will continue to see good demand from homebuyers,” Mr. Lim said.

Mapletree will also continue to make yieldaccretive acquisitions and develop income-producing assets, through either transforming more precincts or developing flagship properties in Vietnam. “As a country with great potential in terms of investment and a booming economy, Vietnam has a lot to offer and we seek to scale greater heights in the long run,” Ms. Koh said.

 

Manufacturing and processing continues to be the sector attracting the major proportion of FDI into Vietnam, taking up over 40 per cent in 2018, while real estate is the second highest, with over 23 per cent, so foreign investors are likely to continue to target these sectors in the future, according to Mr. Giles Cooper from Duane Morris.

In fact, industrial real estate has gained new growth momentum given the increase in production shifting from China to alternative locations in Southeast Asia, including Vietnam, as well as the positive impacts of trade agreements, according to CBRE Vietnam.

While this trend is not new to many, as the cost of production in China continues to rise and makes relocation seem like a financially-viable choice to many manufacturers, new research from Cushman & Wakefield (C&W) highlighted that Vietnam ranks third in cost attractiveness for global manufacturers in the region.

As a result, BW Industrial affirmed its targets of building state-of-the-art industrial and logistics real estate infrastructure that is best suited to the growing demand from multinationals, logistics providers, and e-commerce providers in Vietnam.

“Several sites in major cities and provinces will see construction completed this year and we are receiving a very positive market response regarding leasing,” Mr. Chansaid. “We want to keep the momentum going and help manufacturers or logistics players settle down in our facilities, without any hassles.” 

Smart home trend

Along with increasingly strong FDI inflows into Vietnam’s real estate market, the whirlwind of Industry 4.0 has been creeping into the property sector in recent years, especially high-end real estate.

Ms. Tran Minh Ai, Director of Property Management at Savills Ho Chi Minh City, said that smart technology is an indispensable element of luxury five-star products in prime locations. For projects with a location disadvantage, meanwhile, technology enhances property value and increases product competitiveness against those in better locations.

Technological application has become a new competitive edge for leading real estate developers, and as the concept of smart homes becomes more widespread, rising interest could encourage more mainstream developers to incorporate smart technology in their new projects.

Smart home technology in Vietnam is still in its infancy and only five projects launched have applied it in their apartments.

Most were new developments or still under construction, with those conducting a soft launch including Alpha King Real Estate’s Alpha City and Centennial Ba Son and Dreamhouse’s D-Vela, High Intela, and West Intela.

While there are only a very small number of smart apartments being built at present, it is a good way for smaller or newer developers to compete. They must adapt and catch up with new trends so as not to be left behind by other markets in the region.

In commenting on the prospects of smart home development in Vietnam, Ms. Lieu Nguyen, President’s Liaison to Vietnam for the National Association of Realtors, said development trends in real estate projects around the world in general and in Vietnam in particular will be largely driven by the application of smart technologies.

The world will see the emergence of more and more smart cities; an indispensable element of which is smart homes.

Although the market has seen many positive developments, it is no simple matter to boost the smart home movement in Vietnam.

Many smart home solutions have been applied in real estate projects in Vietnam, but this is only to “pave the way”.

It is estimated that it might take about three to five years for the innovation to truly grow. VN Economic Times

Hong Nhung & Ngoc Lan

Tycoons gather strength for new game – industrial property

Tycoons gather strength for new game – industrial property

Some large corporations with plentiful capital have decided to pour money into industrial real estate as they can see opportunity in the sector.  

Vietnam’s property market continues to expand: Savills

Vietnam’s property market continues to expand: Savills

The Vietnamese real estate market has high development potential thanks to positive economic prospects, a strong foreign direct investment flow and suitable monetary policies, according to a research of Savills Vietnam.

Vietnam's domestic property price to be stable in H2

Vietnam's domestic property price to be stable in H2

The domestic real estate market in the second half of this year is not expected to witness significant changes in price due to stability in supply.

 
 

Other News

.
Vaccines arriving later this year to be used for both children and adults
Vaccines arriving later this year to be used for both children and adults
FEATUREicon  23/09/2021 

Dr Pham Van Phuc from the Central Hospital for Tropical Diseases said that research shows that Covid-19 is less dangerous to children than adults and infected children have fewer complications.

Factories with only a few positive Covid-19 cases should remain open under new rules
Factories with only a few positive Covid-19 cases should remain open under new rules
FEATUREicon  22/09/2021 

It’s unreasonable to close a factory with thousands of workers when only one positive case is found, officials have said.

Some cities reopen beaches, restaurants under new rules
Some cities reopen beaches, restaurants under new rules
FEATUREicon  21/09/2021 

The cities and provinces that have controlled Covid outbreaks have reopened some services and received their first travelers.

Tourism reopening: Phu Quoc’s problem, Vietnam’s lesson
Tourism reopening: Phu Quoc’s problem, Vietnam’s lesson
FEATUREicon  22/09/2021 

Reopening Phu Quoc to receive tourists has proven to be a big challenge.

Hanoi mulls solutions to stay safe when social distancing rules end
Hanoi mulls solutions to stay safe when social distancing rules end
FEATUREicon  21/09/2021 

Hanoi needs to find solutions to prevent the coronavirus from spreading and causing overloading of the healthcare system.

New mindset needed to reverse production stagnation
New mindset needed to reverse production stagnation
FEATUREicon  21/09/2021 

“Localities should not always count plants and livestock in their reports. We need to change the way of thinking to improve the situation,” said Minister of Agriculture and Rural Development Le Minh Hoan.

Government urged to act promptly to both save businesses and protect people's health
Government urged to act promptly to both save businesses and protect people's health
FEATUREicon  21/09/2021 

Actions are needed now to save businesses, or it will be too late, enterprise associations say.

Vietnamese businesses need urgent assistance
Vietnamese businesses need urgent assistance
FEATUREicon  22/09/2021 

Businesses are in serious difficulty due to the impact of the Covid-19 pandemic. They need timely and substantive support measures from the Government.

Covid-19 pandemic and the golden season of digital transformation
Covid-19 pandemic and the golden season of digital transformation
FEATUREicon  20/09/2021 

On September 5, when the Covid-19 outbreak was still rampant, the new school year started online for millions of students. 

Alarming rise in cases of depression in Vietnam
Alarming rise in cases of depression in Vietnam
FEATUREicon  20/09/2021 

According to a report on mental health by the Lancet Commission, mental disorders are on the rise in every country in the world and will cost the global economy $16 trillion by 2030.

Vietnamese can create Metaverse virtual universes
Vietnamese can create Metaverse virtual universes
FEATUREicon  19/09/2021 

Anyone can have another life inside a virtual world: what seemed like sci-fi movies only is coming very close.

Mobile Money paves way to apply 'sandbox' for new services
Mobile Money paves way to apply 'sandbox' for new services
FEATUREicon  19/09/2021 

The trial Mobile Money service allowed by the Prime Minister will set a precedent for applying a "sandbox" scheme for new services and professions in digital society.

Businesses propose new regulations to replace Directives 15, 16
Businesses propose new regulations to replace Directives 15, 16
FEATUREicon  18/09/2021 

Associations of businesses have asked the Prime Minister to issue new directives on pandemic prevention and control to replace Directives 15 and 16 with regulations that fit the new circumstances.

Businesses struggle with increased costs, impact from Covid-19
Businesses struggle with increased costs, impact from Covid-19
FEATUREicon  19/09/2021 

According to the Vietnam Association of Beer, Wine and Beverage (VBA), more than 85 percent of drink manufacturers have had difficulties in product distribution.

Companies reporting profits actually incurred losses, audits show
Companies reporting profits actually incurred losses, audits show
FEATUREicon  19/09/2021 

A difference in profits of listed companies before and after auditing has left investors worried about the accuracy of finance reports.

Extending lockdown, HCMC adjusts social, business activities
Extending lockdown, HCMC adjusts social, business activities
FEATUREicon  17/09/2021 

HCM City authorities are planning to grant green cards associated with personal QR Codes in certain districts; amend regulations on goods delivery and receipt; and allow more business fields to operate, commencing from September 16.

Airfare scheme may deprive 43 million passengers of opportunity to fly at low cost
Airfare scheme may deprive 43 million passengers of opportunity to fly at low cost
FEATUREicon  17/09/2021 

If a proposed airfare scheme is applied, the fees will make it impossible for low-income earners to travel by air.

Vietnam builds ‘fortress’ to fight pandemic, not the economy
Vietnam builds ‘fortress’ to fight pandemic, not the economy
FEATUREicon  18/09/2021 

The economy reflects the operation of all 13 southern cities and provinces, and different behaviors of each is hindering economic development.

Hanoi, HCM City to loosen social distancing, prepare for reopening
Hanoi, HCM City to loosen social distancing, prepare for reopening
FEATUREicon  15/09/2021 

Hanoi leaders have mentioned the possibility of loosening social distancing from September 15 if the spread of the coronavirus can be curbed. HCM City is also considering loosening social distancing regulations two weeks after September 15.

Local specialties plummeting in price
Local specialties plummeting in price
FEATUREicon  16/09/2021 

While Phu Yen lobster prices are surging, VND100,000 per kilogram more expensive than the previous crop, other aquatic specialties including ca lang (hemibagrus) and hau sua (oyster milk) have seen prices plummet, causing big losses for farmers.

 
 
 
Leave your comment on an article

OR QUICK LOGIN