World Bank has revised its forecast for Vietnam’s economic growth for 2016 to
6.2% from previous estimate of 6.5%, mainly due to unfavorable climate and
weaker global demand. However, Vietnam is still expected to have the brightest
growth prospects among Southeast Asian economies and one of the most attractive
environment for foreign investors.
of May 2016, total inward FDI into Vietnam reached US$10.16 billion (both newly
registered and adjusted), up 136% y-o-y; implemented FDI was estimated to have
reached US$5.8 billion, up 17.2% y-o-y. The manufacturing and processing
industry attracted the largest share, at 65% of total registered capital. Real
estate ranked third with 5.4%. Korea was the leading investor with newly
registered FDI accounting for 38% of total new investment.
terms of real estate, leasing activities continue to gain momentum. Rent growth
and occupancy levels witnessed sustained improvements across all property
types. Nevertheless, the industry still needs more transparent approvals and a
regulatory body to safeguard the interest of foreign investors. Developers
should understand the objectives and investment pattern of these investors in
order to spur more foreign capital.
property sector has been the second-highest attracter of foreign direct
investment in the first ten months of this year, with 46 projects at an
aggregate $982.59 million.
According to recent
statistics, the property sector was behind the manufacturing and processing
sector, which has so far accrued a total of $12.84 billion in 842
newly-registered and 691 capital-added projects, equaling 72.9 per cent of the
total foreign direct investment (FDI) inflow to Vietnam.
investments by foreign investors include the $226 million real estate project
named Midtown by Cayman Islands and the $6 billion Saigon Peninsula project by
Pavilion Group, Genting Malaysia Berhad, and Vietnamese partner Van Thinh Phat.
There is also the complex of port and industrial zones in the north-eastern
province of Quang Ninh with the investment capital of over $315 million.
Moreover, Amata Long Thanh will earmark $309 million to build up an urban
development project in the southern province of Dong Nai.
In addition to the
usual South Korean and Singaporean investors, the Japanese are emerging with a
range of projects.
Japan’s Meade Group,
the contractor of the Ho Chi Minh City Metro Line’s Ben Thanh-Suoi Tien
stretch, just started work on a $30 million high-end real estate project in Ho
Chi Minh City’s District 2, called Wateria Suites. Previous to that,
Daiwa House Industry, Nomura Real Estate Development, and Sumitomo Forestry
were awarded an investment certificate to develop a $220 million condominium
project in Ho Chi Minh City’s District 7. And then there are
the big players. Kajima Corporation joined with Indochina Land for a range of
property projects with the total investment of around $1 billion in the next
ten years. Mitsubishi Estate, another famous Japanese property developer,
recently diversified its portfolio in Vietnam by buying into a property
development project in Hanoi, with the total investment of $1.9 billion.
According to Yakabe
Yoshinori, Deputy Consul General of Japan in Ho Chi Minh City, with the
increase in the middle- and high-income classes, the supply of safe and secure
housing is becoming an urgent issue.
“The real estate sector
is becoming very attractive to foreigners as well, with revised housing
regulations since July of last year which allow foreigners to own houses in
Vietnam,” Yoshinori said, at a recent signing ceremony for Ho Chi Minh City’s
Kikyo real estate complex. The project is a joint venture between
domestic Nam Long Investment Corporation and two Japanese partners, Nishi
Nippon Railroad and Hankyu Realty.
Japanese investors prefer to acquire projects
which have completed investment procedures and are coming into the construction
phase, rather than joining them from the beginning. They have shown a special
preference for projects which are coming into operation and starting the
turnover collection period.