Real estate among VN’s most attracted industries for foreign investors

Reports from the agency showed that the sector attracted a total foreign direct investment (FDI) of US$51.1 billion as of the end of September, accounting for 16.5 percent of the total FDI in Vietnam.
Licensed large FDI projects in the real estate sector in the first nine months included the $2.8-billion Nghi Son 2 thermal power plant in the central province of Thanh Hoa, the $2.3 billion Nam Dinh 1 thermal power project in the northern province of Nam Dinh and the $1.27 billion O Mon gas pipeline project in the Mekong Delta province of Kien Giang.

Model of the $1.27 billion O Mon gas pipeline project in the Mekong Delta province of Kien Giang.

During the period, the increase in FDI was largely focused on the industrial sector and producing results in the field industrial infrastructure development.
Jones Lang LaSalle general director Stephan Wyatt said foreign investors have showed interest in industrial parks, especially when the government of Vietnam offers numerous incentives for developing those facilities.
The real estate sector also recorded 3,500 newly-established firms per year, accounting for 3.7 percent of the total newly-established firms, according to the Jones Lang LaSalle Vietnam.
According to experts, one of the factors assuring foreign investors in property market is the stability in many aspects, including a positive GDP growth rate.
Besides, they said, foreign investors have shown greater interest in Vietnam’s property projects as the sector was forecast to be transparent and open. Particularly, the government has further simplified administrative procedures and tightened policies on land planning.
Meanwhile, mergers and acquisitions in the local real estate market have also jumped in 2017 as foreign investors look for local partners, accelerated urbanisation and an expanding middle-class population with higher incomes.
Chief Executive Officer and director of Indochina Capital Peter R.Ryder acknowledged that Vietnam has created much more favourable conditions for foreign investors, particularly the partnership with local firms.
The report stated that, in addition to being the engine of industrial infrastructure development, FDI also contributes to the growth of other segments in the real estate market. Both office and hotel areas show high demand, with increased rental space and stable rental performance.
Savills Vietnam stated that while these segments are becoming increasingly attractive, active assets are getting more attention from investors, with the exception of new projects in prime locations in the centre of Hanoi and Ho Chi Minh City. However, with limited supply, the market is witnessing an increase in the value of real estate projects in all segments.
Japanese investors are active in the market. Nishi Nippon and Hankyu cooperate with Nam Long to build a 26 ha Mizuki Park residential project in Binh Chanh district, Ho Chi Minh City, with total investment reaching up to US$351 million.
In addition, famous Japanese retailer Aeon Mall officially cooperated with BIM Group to develop the second shopping centre of Aeon in Hanoi with an area of 16.7 ha, at an estimated total capital of $200 million. Son Kim Land has also successfully called for $100 million in project development from Japanese investors.
Director of the Investment Department under Savills Vietnam Su Ngoc Khuong stated that M&A continues to be a form that the majority of investors will use to enter the Vietnamese market.
This continues to be an essential trend as the market becomes more mature and investors will have to show their skills and experience to gain opportunities for cooperation to participate in projects that display value and potential./.