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Why haven’t Japanese invested in real estate in Vietnam?
Hajime Suzuki, Executive Director of the Overseas Construction Association of Japan, said that Japanese investors are very cautious about investments in real estate markets in foreign countries, to explain why Japanese investors still remained outsiders in Vietnam’s real estate market, while other foreign investors are active participants.
“The common characteristic of Japanese investors and contractors is that they are always cautious about investments in the real estate sector,” Mr Suzuki said in an interview with Thoi bao Kinh te Viet Nam newspaper.
In the first years of the last decade, an economic crisis occurred in Japan as enterprises had injected too much money in real estate, which then created a ‘real estate bubble’ in the market. Investors incurred heavy losses when house and land prices plummeted.
“This is a lesson Japanese businesses will never forget, which explains why they always keep cautious with investments,” he said.
Mr Suzuki affirmed that Japanese investors are keeping away from investments in Vietnam from their inherent cautiousness, and traditional characteristics, rather than because of the risks of the Vietnamese market.
“Vietnam’s real estate market has stabilised, though prices go up and down sometimes. The price fluctuations should be seen as a normal thing,” he said.
Vietnamese enterprises, according to him, can draw lessons from Japan’s real estate crisis. When the crisis broke out in Japan, the companies that purchased land to develop real estate projects incurred heavy losses as land prices unexpectedly decreased. Meanwhile, the enterprises which only undertook the construction of the projects still made profit.
Currently, enterprises in Vietnam, South Korea and Taiwan are all trying to purchase land to develop real estate projects. This could bring a lot profit to investors, but it also carries risks as well, especially if land prices decrease.
Regarding the policies Vietnam should apply to manage the real estate market, Mr Suzuki said that the government of Vietnam has made wise moves in tightening credit, raising interest rates and strengthening management in order to manage the ‘real estate bubble’.
However, he said that Vietnam should raise the tax rates on real estate trade deals further. This policy was successfully applied by Japan to help the country get out of the crisis.
The Overseas Construction Association of Japan now has 45 member construction companies, 23 of which have representative offices in Vietnam. The companies have been acting as contractors of many construction projects for public purposes and projects on building factories.
VNN
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