A project in Ho Chi Minh City. (Photo: VNA) Market research company Cushman & Wakefield said recently “Manytransactions are in the negotiation process with a positive outlook. Theexpected investment goals still lie in finding clean, good-quality land fundswith real value, as well as having legal ownership rights… and developmentpotential.”
While there are still challenges, Cushman & Wakefield believe this is theright time for businesses to step up activities, especially those with deeppockets.
It attributed the optimistic forecast to falling bank interest rates and thepassage of many new decrees that remove obstacles faced by the property sector.
Besides, the Government is implementing many other solutions to improve thequality of real estate projects, transparency, rule of law, and the businessenvironment in general.
The property market, notably in Ho Chi Minh City and Hanoi, has developedrapidly since the Law on Real Estate took effect in 2003.
Since then, M&A activities have also increased significantly in both numberand value, according to Cushman & Wakefield.
But data from RCA and Cushman & Wakefield shows a slump in 2023, with thefigure for the first nine months falling by 33% year-on-year to 729 million USDdue to the lack of high-value deals.
Asian investors from Singapore, Malaysia, Taiwan (China), and the Republic of Korea(RoK) have led the way with advantages like geographical location, culturalsimilarities and understanding of local laws.
Overall, 2023 transaction data shows that foreign investors still account formost property transactions, purchases and investment activities, with thedomestic sector accounting for less than 10% of transactions.
The company attributed the downturn to the fact that domestic businesses arestill facing many unfavourable factors, such as the generally tricky situationof the economy, unresolved project legalities, corporate bond problems, andlack of access to capital.
“As the global economy is going through uncertainty, an emerging country likeVietnam has become quite a promising investment market,” said Trang Bui,country head of Cushman & Wakefield Vietnam.
The attractive rate of return in Vietnam is an essential factor in theinvestment decisions made by foreign investors, Cushman & Wakefield said.
Since 2018, Vietnam has seen a total of 4.2 billion USD in property investment,of which housing and industrial assets accounted for 46% and 28%, according toRCA and Cushman & Wakefield data.
This shows foreign investors remain focused on traditional assets, mainlyserving the needs of actual end users.
The high-end housing market remains the top choice of foreign investors. Withincreasing disposable income and rapid urbanisation, especially in Hanoi andHCM City, Vietnam has expanded its appeal to investors who want to target thehousing sector.
Until 15 years ago, FDI flows were concentrated in the high-end housingsegment.
Well-known names in the market, such as Keppel Land and Capitaland, were amongthe first to offer high-end real estate projects, such as The Estella and TheVista.
The total supply of luxury apartments in HCM City then was around 1,700 units,of which about 1,000 were by foreign developers.
The market has since started seeing more foreign investors like Hong Kong Land,Frasers Property, Mapletree, Daiwa House, Nomura, Sumitomo, Lotte Group and GS.
This has increased the number of luxury apartments developed by foreigninvestors to 23,800 units as of Q3 2023.
Since 2018, the industrial and logistics real estate segment has outperformedmost others thanks to growth in manufacturing, exports, e-commerce,transportation, and warehousing.
The manufacturing sector accounts for the majority of FDI as many businessesare interested in Vietnam as a new destination for expansion in Southeast Asia.
Foreign funds continue to look for investment opportunities in the form ofwell-located office real estate in Vietnam, especially in HCM City.
In the last five years, rentals in office buildings have improved, especiallygrade A.
Since 2022, the market has been seeing some transactions, notably with the saleof hotels Ibis Saigon South and Capri by Fraser in HCM City.
In 2023, there was a significant transaction in the retail sector worth $52million by Singapore's Keppel Land Group./.
VNA
