VietNamNet Bridge – The fall of the real estate market is not only a lesson for domestic investors but also foreign enterprises in Vietnam.

In 2007-2009, the real estate market exploded. Foreign investors announced a series of million USD projects in Vietnam. With foreign labels, plus beautiful designs and new ways of marketing, these projects immediately attracted home buyers as well as investors.

At that time, villas sold by foreign investors were priced tens of billion VND (millions of USD) and buyers had to queue to get one.

However, the past is over and a new risky game has opened and even foreign investors have to reshape their strategies.

Big estate projects in Vietnam have changed. Most recently, an investor from Malaysia, Perdana ParkCity has announced adjustment of phase 2 of its project in Hanoi, from a housing project to a housing-office for lease one.

After adjustment, the population declined from 35,000 to 23,000 people, the land for housing reduced and the area for public works increased. General Manager of ParkCity Hanoi project said the company has disbursed more than $100 million for this project, of the estimated total $1 billion of investment. Earlier, Perdana Parkcity acquired 100% of its shares and took over the Vietnam International Development JSC (VIDC).

A project in Ha Dong District, Hanoi, owned by Hibrand Daewoo Cleve from South Korea, has also neen adjusted. The investor plans to build low buildings instead of seven high-rise ones. This project is widely known as a "super" apartment project in Hanoi, with estimated capital of over $421 million, with 15 buildings of 36-40 storeys, totaling over 4,500 apartments.

In addition to high-end real estate development, foreign investors are turning to low-price housing segment. Indochina Land, the real estate investment fund of Indochina Capital and the Nam Long Investment Joint Stock Company, have announced an investment in the Ehome 3 project in Binh Tan District, Ho Chi Minh City.

CapitaLand has also focused on the segment for average income earners, starting with the ParkSpring project in District 2, Ho Chi Minh City.

According to a real estate professional, in the current context, changing business strategies to survive in the property market is unavoidable. The foreign investors are subject to fierce competition when local investors have had sufficient experience to develop their own projects. Besides, the demand for high-class real estate has fallen and buyers are more choosy than before.

Investors stuck

The wave of foreign investment has made a significant appearance in the Vietnam real estate market, but many projects are idle and have been revoked.

Topping the list of idle projects owned by foreign investors is the Poland-owned TSQ Vietnam Company with the "Ha Tay Millennium Tower" project in Ha Dong district, Hanoi.

Also in Hanoi, the Booyoung project of Booyoung Vina Co. (South Korea) was licensed in 2006 but it has not been implemented due to financial difficulties.

Two big projects in HCM City – the Vietnam International University Urban Project (VIUT) and the Vietnam Financial Centre (VFC) – both invested in by Berjaya Group (Malaysia) are still idle after receiving investment certificates for many years.

Experts said that despite the ups and downs of the real estate market in recent years, it is still attractive to foreign investors. Many foreign investors have promoted investment in the real estate sector in Vietnam.

Creed Group, a Japanese investment fund, recently marked its first presence in Vietnam through an investment cooperation agreement with Nam Bay Bay Investment JSC (NBB) to develop three estate projects. The Amata Corporation (Thailand) has proposed investment in the high-tech industry urban project in Quang Ninh Province.

Lawrence Peh, CEO of ParkCity Hanoi, said that although the company adjusted its plan, the total capital has increased because investment in commercial centers, utilities, and an international standard school are expensive. Total investment for ParkCity Hanoi will be in the billions of dollars.

According to the latest report of the Bureau of Foreign Investment, by the end of November, foreign investors registered more than $1.2 billion in 32 new projects and four expanded projects in Vietnam. Compared with the same period last year, the number of projects increased by 12 and three times more than that in 2012. These figures reflect the increase of FDI inflow into Vietnam this year.

The Executive Director of CBRE Vietnam, Mr. Marc Townsend, said investors remain cautious when investing in Vietnam. They only take step by step and have longer vision and longer plan in the country. But with these new policies to support foreign investors in Vietnam, in the long run, the wave of FDI into Vietnam will become stronger.

D.Anh