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Sentiment robust from foreign real estate investors
Business seems to be picking up favourably in Vietnam’s real estate arena.
According to the Foreign Investment Agency under the Ministry of Planning and Investment, in January, the registered capital of foreign direct investment (FDI) increased sharply and the disbursement of FDI also surged.
The total capital registered in Vietnam in January reached $2.36 billion, an increase of more than 40 per cent on-year.
Up to $1.27 billion of such capital was poured into the real estate sector, accounting for 53.9 per cent of total registered capital and doubling compared to January 2023.
The increase in FDI into Vietnam and the breakthrough in the real estate sector are opening up many promising opportunities, especially in the manufacturing sector. Improvements in infrastructure development, administrative procedure reform, and investment in innovation centres in Vietnam are also contributing to making the market attractive to international financiers.
Fitch Ratings has also recently upgraded Vietnam’s long-term national credit rating to BB+ with a “stable” outlook.
Meanwhile, the retail market also recorded vibrant activities from foreign investors. In September 2023, Lotte Group opened its new mall in Hanoi’s Tay Ho district, while THISO opened its third Emart hypermarket in Ho Chi Minh City and plans to put money in the north after purchasing a 2.4 hectare land plot in the capital.
In the last months of 2023, many large developers launched new housing products, including The Privia project in Ho Chi Minh City, and Canopy Residences and Lumière Evergreen projects in Hanoi. The next phases of the Akari City and Glory Heights projects have also been launched in Ho Chi Minh City.
Meanwhile, Gamuda Land from Malaysia is proceeding with three new projects: Eaton Park and Elysian in Ho Chi Minh City, and Artisan in Binh Duong province.
Singaporean giant CapitaLand is moving forward with its mega project called Lumi in Hanoi and is also slated to start its first project in Binh Duong, Sycamore, imminently.
Matthew Powell, director of Savills Hanoi, commented that upcoming new laws on land, housing, and real estate have given a boost to the property landscape.
“The adoption of these laws can be seen as a positive signal for the investment market in the next year, boosting confidence. The Vietnamese market with real demand for housing as well as confidence in the office and industrial real estate sectors will be the key to the start of a new cycle this year. However, we still need to wait for the legal documents to be able to observe clearer changes,” Powell said.
Meanwhile, CBRE carried out a survey on Asia-Pacific investor intentions, conducted in November and December, involving more than 500 people answering a range of questions related to their buying intentions, perceived challenges, and preferred strategies for the coming year.
According to the survey, Vietnam secured second position among the most sought-after emerging markets for added value and opportunistic strategies. This ranking places Vietnam just behind India in terms of attractiveness.
“Vietnam’s market presents a unique landscape where portfolios consisting of income-producing assets are scarce and typically not available for sale. As a result, most investors in Vietnam focus their attention on industrial and office assets, aligning with the prevailing trend observed across the Asia-Pacific region,” read the survey.
Duy Nguyen, investment properties director at CBRE Vietnam, commented that Vietnam’s robust economy and export-oriented strategy have propelled trade activities, thereby underscoring the critical importance of efficient logistics and supply chain management.
“Investors recognise the potential in supporting and capitalising on these requirements, further driving the demand for industrial assets,” Duy said.
Additionally, residential development sites in Vietnam continue to generate strong interest from foreign developers.
“Many are actively exploring opportunities in distressed assets or properties owned by landlords facing legal challenges or limited access to funding sources,” he added. “Investors with a long-term view on the potential of Vietnam’s economy and ready to deploy capital are most likely to reap the benefits of the repricing and decompression of asset yields. This is particularly true when sellers are seeking to exit at the conclusion of their investment window.”
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