The 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.

As 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.

In 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.

The 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.

Some notable 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.