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Real estate market in danger of being taken over?
The big difficulties domestic real estate firms are facing prove to be big opportunities for foreign investors to jump into Vietnam’s real estate market. This has sparked concern that the domestic real estate market could be swallowed by foreigners.
Swallowing real estate market? Not so easy!
The real estate market recently has witnessed giant investment projects worth billions of dollars
It now seems to be the most difficult period for real estate firms, which are seriously lacking capital due to banks’ policy on tightening real estate credit. Pushed against the wall, domestic real estate firms have to either seek foreign partners to develop projects, or transfer the projects to foreign investors, who are more financially capable.
Foreign investors now have the chance to buy 'commodities' at low prices, but they are not hurrying to do so. Dang Hoang Vu, General Director of Thanh Binh Real Estate Company, said some domestic investors still cannot transfer projects at cost, as foreign investors believe that real estate prices have not yet dropped to their deepest lows.
The real estate market recently has witnessed giant investment projects worth billions of dollars. According to the General Statistics Office, in the first quarter of 2008 alone, foreign direct investment (FDI) in the real estate market was $5.1bil, or 88% of total FDI capital received by Vietnam.
The high figure of FDI capital in the real estate market has made people worried that the market will be swallowed by foreign investors.
However, observers say that the above figure is just registered FDI capital, not the disbursed sum, and so does not truly reflect the market situation. Moreover, licenced project land just accounted for a small part of the national land fund. Moreover, it is not easy for domestic investors to transfer projects to foreign investors. In most of the projects, the process of site clearance has not been completed, while foreign investors only want clean land.
Ho Dac Hung, Chairman of Vinaland, a real estate consultancy firm, said foreign investors are always cautious about investment decisions, and they set high requirements in making deals, which not many projects can meet.
More harm than good
Some experts have urged the state to set up suitable monetary policies to unlock the ‘credit valve’, so as to ‘rescue’ real estate projects which are now thirsty for capital.
Experts said that if domestic real estate firms died, foreign investors would jump in to control the market: profit from investments and real estate product development would be transferred abroad.
A real estate firm is worried that if the state does not set a limit on foreign investment in real estate, the domestic market will be controlled by foreign investors, who will decide the prices of products, including the segments of products domestic investors now have advantages in.
Meanwhile, Hoang Anh Dung, Chairman of Conic Investment Company, believes that the participation of experienced foreign real estate corporations will be helpful in generating modern new urban areas and high-quality architectural works. Foreign investors will also bring capital and modern technologies.
Dung said that making investment and making profit is the legitimate right of investors. The only thing the state needs to do is to ensure that investors respect the laws.
Vu of Thanh Binh Company also thinks that it is not important where the investors come from, from home or abroad. The more important thing is having a healthy real estate market which can serve the socio-economic development strategy well.
VNN
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