VietNamNet Bridge – Foreign direct investment (FDI) into the real estate sector in Vietnam is expected to resume in the days to come. But investors would be well-advised to listen to the news carefully before injecting money.

Sunwah Group, a Hong Kong-based real estate firm, which has been in Vietnam since 1993, earlier this year received the investment license for a project in the Binh Thanh District of HCM City.

The $200 million project, to which it is contributing 48 percent of capital, will be its third project in Vietnam. The other two are Sunwah Tower and Saigon Pearl.

The new project registered by Sunwah has helped raise the total of FDI capital in the real estate sector in the first quarter of 2014 to $288 million, which accounts for 8.6 percent of total FDI capital in Vietnam.

Five other foreign invested projects in the real estate sector, either newly registered or expanded, were also registered during the same period.

The modest figure is encouraging enough to Vietnam, which received only 23 projects in the whole of 2013 and 13 in 2012.

Vietnam witnessed the crest of the real estate investment wave in 2007-2008, when investments in the sector accounted for 50 percent of total FDI capital in the country. But many of the registered projects were later canceled due to the economic slowdown and limited investors’ capabilities.

However, the Ministry of Planning and Investment believes that the newly registered projects in this, the second investment wave, would come to fruition. That’s largely because they are being developed by firms with such well-establised names as CapitaLand, Chiaphua Group, Indochina Land and Sembcorp.

Keppel Land, a giant in the real estate sector, late last year teamed up with a Vietnamese company to develop the Hanoi Westgate project, capitalized at $140 million.

Keppel Land has not released any official information about the project, but sources said the investors have begun the site clearance work.

Meanwhile, Hong Kong’s Chiaphua, through its Jen Capital Vietnam, a subsidiary, has poured money into a project in HCM City. Indochina Land has injected money into Ehome, while Sembcorp Development has done the same with the new urban area in Binh Duong Province.

Savills Vietnam’s Deputy Managing Director Troy Griffiths predicted that the FDI flow into the real estate sector would increase significantly in the time to come amid macroeconomic stability and a recovering real estate market.

However, this does not mean that foreign investors will be all too eager to spend money.

In its 2013 financial report to shareholders, Keppel Land said clear signs of recovery are being seen in the Vietnamese market, which helped it sell 170 apartments there. This encouraging development makes it believe that new projects should be kicked off in 2014-2015. However, it said that the launching of new products would still depend on market performance.

Griffiths from Savills Vietnam noted that experienced real estate firms can weather all conditions well because they can adapt their offerings to the current needs of the market.

CapitaLand, for example, some years ago began targeting the medium-class housing market segment when it developed the PARCSpring project in District 2 in HCM City. In a similar move, Indochina Land has developed Ehome, as the high-end market segment is no longer as hot as it once was.

NCDT