FDI flow into Vietnam’s real estate sustains stable growth. (Photo: VNA)Hanoi (VNA) – Despite several upsand downs over the last decade, the flow of foreign direct investment (FDI)into Vietnam’s property market has managed to sustain stable growth.
As of July 2018, real estate had held onto itsspot of second place in terms of FDI attraction to various sectors, with 704valid projects worth 56.3 billion USD, according to the Foreign InvestmentAgency of the Ministry of Planning and Investment.
Khanh Nguyen, head of the capital marketdivision in Vietnam at Jones Lang LaSalle (JLL), said that Vietnam, as aneconomy with fast and stable growth, has become a magnet for foreign investors.Asian investors, including those from Japan, the Republic of Korea, Singapore,and China, currently make up 73.9 percent of total FDI poured into its industries,including real estate.
Notably, the FDI flow into local real estategrew continuously between 2015 and 2017, compared to the non-stop decline ofthe 2010-2013 period.
In fact, many European investors now also wantto expand their presence in Vietnam, which has boosted direct investment incommercial property, such as office buildings or exhibition rooms in uptownareas.
Businesses from the US also hold an importantrole, ranking third amongst FDI investors in Vietnam. Although there haven’tbeen any official statistics of the FDI into real estate per country released,it is noticeable that investors from America are highly dynamic in this regard.
Notably, Warburg Pincus, a private equity firm basedin New York, has pledged to invest more than 1 billion USD in Vietnam, withmost of this capital channelled into the real estate market via commercial,hotel, and industrial property.
Savills Vietnam said the property sectorcontinues to receive much attention from foreign investors, noting that in thesecond quarter of 2018, Vinhomes JSC – a housing developer of Vingroup – heldits initial public offering and attracted many domestic and foreign investors.Singaporean fund GIC purchased 5.74 percent of Vinhomes’ shares.
After the real estate market suffered arecession in 2008, FDI inflow began to recover in late 2013 and early 2014, andhas now expanded into mid-end and affordable housing segments, Khanh Nguyensaid.
She noted some of the outstanding deals over thelast three years, including the partnership between Hankyu Realty, Nishi NipponRailroad of Japan, and Nam Long Group of Vietnam; the cooperation between SanyoHomes and Tien Phat Corporation; and the joint venture of MitsubishiCorporation and Phuc Khang Corporation.
A number of foreign investors have shown theirreadiness to join Vietnamese partners in forming joint ventures or contributingcapital to mid-end or affordable projects. While domestic businesses have agood understanding of the local market and legal regulations, foreign investorshave financial strength and experience, and together this pairing will helpincrease their projects’ value, she added.
Aside from the bright outlook for the housingsegment, Savills Vietnam expects mergers and acquisitions (M&As) will keepvibrant in terms of industrial and logistics property, driven by the growingFDI inflow into production activities and infrastructure expansion and improvedcompetitiveness compared to other countries in the region.
Many insiders also said that FDI poured intolocal real estate will continue the upward trend in 2018. They also forecastmore records will be broken in the fields of M&A and direct investment inthe near future. –VNA
VNA
