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UK property firm opens second office
After opening its head office in Ha Noi earlier this year UK property services firm Knight Frank is setting up shop in HCM City with a new office it opens today, its 209th globally. Viet Nam News spoke with the company's General Director, John Gallander, on the property market and Knight Frank's development plans.
Why did you wait until 2010 to enter this market, despite having a long presence in neighbouring countries like Malaysia, Thailand and Cambodia?
We think this is a good time to come to Viet Nam. Knight Frank has been exploring Viet Nam for many years and looking for the right time and the right team to enter the market. The growth in the real estate market in this country and the services industry are very attractive to us.
The real estate market in Viet Nam has strong fundamentals across the board and continues to grow on a yearly basis in terms of the number of properties, the quantity of construction and the number of businesses and individuals renting or purchasing property.
In addition, there is [only] a moderate amount of real estate service providers compared to more developed markets. Savills and CBRE are currently the leading players in the industry in Viet Nam and Colliers, Cushman&Wakefield, and Jones Lang LaSalle also have a strong presence. We see co-operation amongst agents as a driving force towards efficiencies and profitability in our sector.
It is also our view that the standard of services and the level of expertise brought to bear for clients in Viet Nam is not as high as it could or should be as this is still a relatively young industry in Viet Nam. The standards of services are rapidly improving and this should lead to higher fees like the hotel sector currently enjoys. Knight Frank Vietnam will co-operate and work alongside other service providers to raise these standards for our respective clients. All parties can win in this equation.
After several months here what is your opinion of the market situation in Viet Nam?
I believe both the real estate development industry and real estate services industry are progressing at a rapid pace in Viet Nam and will catch up with the standards of some of the more developed countries in the region very quickly.
The population is young and enthusiastic and well-educated and very motivated. There is a tremendous labour pool in Viet Nam with a highly educated population that works extremely hard.
The architecture and design of buildings is advancing rapidly and construction quality is also improving leading to better grades of real estate in all property types. There is a chronic shortage of true quality space in almost all sectors of property in Viet Nam and this will persist for a while.
[But] the office sector is getting to the point of saturation of supply as is very high-end residential in our opinion.
How do you see the potential of the market here?
We find that there are still many opportunities for us in the market to aim at in many different specialised niches alongside the more fundamental and basic service deliveries.
We do not invest in property directly, but according to our research, there are many attractive factors to make decisions for investing in Viet Nam.
First, its population is ranked 13th in the world with over 86 million people, literacy rates as high as 94 per cent. Annual GDP growth is quite impressive, especially in 2009, though affected by the economic recession. Viet Nam still enjoyed growth of 5.8 per cent while most of the world was shrinking from a GDP perspective.
In the real estate industry, there are still many opportunities in both real estate services and investment in this country. The market is still dominated by principal-to-principal transactions. As the market matures, agents that can add value to their client's position who will be employed on both sides of the transaction. In more developed markets, it is the norm to have a buyers agent and a sellers agent for most real estate transactions.
For example, in the US, probably 90 per cent – 95 per cent of all transactions in major markets are brokered and have two brokers in each transaction representing the positions of their principals and acting in a fiduciary manner.
Additionally, the value of real estate in Viet Nam is quite high and it is an attractive investment vehicle, more so on a relative basis than developed markets where only 5-10 per cent of institutional money is targeted at real estate. This is the function of a young stock market in Viet Nam and very limited other investment opportunities in my opinion. Both domestic and foreign interest in the real estate investment arena in Viet Nam will propel more growth.
These fundamental and strong conditions for the development of the real estate sector makes Viet Nam a great place to be practising real estate consultancy.
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