Illustrative image (Photo: vietnamfinance) Hanoi (VNA) - More and more domestic real estate firms have begunto seek investment opportunities in global markets, according to Savills Vietnam.
There are many benefits of expanding into overseas markets. In addition tocomparably stable profit margins, there exist factors that drive more demandfrom domestic firms, such as quick project execution time, high projectquality, low interest rates and market stability, Hoang Nguyet Minh, AssociateDirector, Savills Hanoi said.
The most obvious benefits of offshore investment include assisting domesticreal estate businesses to diversify their portfolios, increase cooperationopportunities with a broader business network, and seek new investmentpotential, she said.
“Offshore investment may not achieve as high a return on investment (ROI) as inVietnam, but in many markets, especially developed countries, investors can beassured of more stable returns," Minh said in Savills Vietnam's statementreleased on February 12.
"Several overseas investments by Vietnamese groups have demonstrated somesuccess, with stable returns, improved knowledge of international standards inportfolio management, creating trust from international investment partners andmost importantly promoting Vietnam on the investment world map,” she said.
Neil MacGregor, Managing Director, Savills Vietnam said whilst foreigninvestors have been actively pursuing investments in Vietnam itself for manyyears, some of these same investors are now seeking Vietnamese partners intheir projects elsewhere.
"Although still not significant in the number of projects we are seeingapproaches from a more diversified range of projects, ranging from hotels,offices and residential to education and healthcare,” he said.
However, offshore investment still carries a lot of risks, the majority ofwhich are due to differences and discrepancies in cultural norms and legalsystems, according to Savills Vietnam.
It is important that investors seek local professional advice from real estateexperts, lawyers and tax advisors. Investors should be clear on their investmentstrategy, target returns, investment horizon and understand potential futureexit options.
The developed markets are much more competitive than the domestic market, sounless investors are well-prepared, they will be at a significant disadvantage.
To achieve successful investment in foreign markets, Minh said, the domesticreal estate developers should conduct market research, including tradingpractices, consumer demand, market trends and future supply as well as howdirectly and indirectly competing projects affect the project.
Market research must also consider any delays in completing a transaction andobtaining an investment licence for a new project in the host country. Ifinvesting in a residential project, when to begin selling is the most importantfactor, as project delays can expose the investor to significant cyclicalrisks. However, for commercial projects, controlling long-term cash flow from7-10 years makes it easier for investors to choose a reasonable time to divest,increase investment returns and minimise risks.
They need to understand the process and methods of investing in the hostcountry. They must always seek advice from lawyers in the country of investmentto ensure that there are no unnecessary legal risks.
They should also carefully consider the capital structure for the project toensure project development as scheduled, she said./.
There are many benefits of expanding into overseas markets. In addition tocomparably stable profit margins, there exist factors that drive more demandfrom domestic firms, such as quick project execution time, high projectquality, low interest rates and market stability, Hoang Nguyet Minh, AssociateDirector, Savills Hanoi said.
The most obvious benefits of offshore investment include assisting domesticreal estate businesses to diversify their portfolios, increase cooperationopportunities with a broader business network, and seek new investmentpotential, she said.
“Offshore investment may not achieve as high a return on investment (ROI) as inVietnam, but in many markets, especially developed countries, investors can beassured of more stable returns," Minh said in Savills Vietnam's statementreleased on February 12.
"Several overseas investments by Vietnamese groups have demonstrated somesuccess, with stable returns, improved knowledge of international standards inportfolio management, creating trust from international investment partners andmost importantly promoting Vietnam on the investment world map,” she said.
Neil MacGregor, Managing Director, Savills Vietnam said whilst foreigninvestors have been actively pursuing investments in Vietnam itself for manyyears, some of these same investors are now seeking Vietnamese partners intheir projects elsewhere.
"Although still not significant in the number of projects we are seeingapproaches from a more diversified range of projects, ranging from hotels,offices and residential to education and healthcare,” he said.
However, offshore investment still carries a lot of risks, the majority ofwhich are due to differences and discrepancies in cultural norms and legalsystems, according to Savills Vietnam.
It is important that investors seek local professional advice from real estateexperts, lawyers and tax advisors. Investors should be clear on their investmentstrategy, target returns, investment horizon and understand potential futureexit options.
The developed markets are much more competitive than the domestic market, sounless investors are well-prepared, they will be at a significant disadvantage.
To achieve successful investment in foreign markets, Minh said, the domesticreal estate developers should conduct market research, including tradingpractices, consumer demand, market trends and future supply as well as howdirectly and indirectly competing projects affect the project.
Market research must also consider any delays in completing a transaction andobtaining an investment licence for a new project in the host country. Ifinvesting in a residential project, when to begin selling is the most importantfactor, as project delays can expose the investor to significant cyclicalrisks. However, for commercial projects, controlling long-term cash flow from7-10 years makes it easier for investors to choose a reasonable time to divest,increase investment returns and minimise risks.
They need to understand the process and methods of investing in the hostcountry. They must always seek advice from lawyers in the country of investmentto ensure that there are no unnecessary legal risks.
They should also carefully consider the capital structure for the project toensure project development as scheduled, she said./.
VNA
