The Ho Chi Minh City property sector has in recent years attracted billions of dollars worth of foreign investment due to its growth potential, real estate consulting companies have said.
The Vietnamese city was recently named among the top three markets for property investors in the Asia-Pacific by the US’ Urban Land Institute and global professional services firm PricewaterhouseCoopers.
Last year, it attracted foreign investment of $8.3 billion, a 39.45 per cent surge from 2018, according to its People’s Committee.
Manufacturing accounted for 40.14 per cent ($3.33 billion) of it followed by the real estate sector with 25 per cent ($2 billion).
Last year, Phat Dt Real Estate Development signed an agreement worth $22.5 million with Japan’s Samty Asia Investments Pte Ltd to develop property projects with a focus on the city.
Singapore’s Keppel Group broke ground in November for Saigon Sports City, a 64ha smart township project in District 2.
Keppel has received licences for 20 other property projects with a total investment of more than $3 billion, most of them in the city.
Phu Dong Real Estate Group Joint Stock Company said it had tied up with three Japanese companies for a joint venture to develop housing projects in the city.
Korea’s SK Group has bought stakes worth $1 billion in giant developer Vingroup, SonKim Land raised $121 million from a group of investors including EXS Capital, ACA Investments and Credit Suisse AG.
Masakazu Yamaguchi, chief representative of Japan’s Creed Group in Vietnam, said demand for real estate in the country remained high, especially in the mid-priced segment.
“The demand is expected to continue rising for the next 30 years,” said Yamaguchi.
Analysts said the Ho Chi Minh City property market would remain a magnet for foreign investment this year and in the coming years.
DKRA Vietnam research and development division director Nguyen Hoang said: “I think real estate will this year continue to be one of the biggest beneficiaries of foreign capital.”
In recent years the sector has consistently ranked second or third in terms of attracting foreign direct investment.
Foreign investment would help meet developers’ demand for funds as the government tightens credit flowing into the property sector, Hoang said.
Besides, he said, foreign investors would insist on higher standards, which would require Vietnamese property businesses to raise their standards and improve transparency.
Amid a trend of relocating production facilities from China, with Vietnam becoming one of the favourite options for many corporations, industrial real estate is among the segments to attract foreign investment.
Industrial real estate rents rose significantly in several provinces last year.
Ho Chi Minh City has been one of the beneficiaries of the shift in manufacturing capacity away from China.
But the city property sector has also been hit hard by the difficulty in getting approval for new projects while there is little or no land left for development in the inner city.
Some Vietnamese businesses are now capable of competing with foreign investors in the high-end and luxury segments, but their number is limited to players like Novaland, Vinhomes, SonKim Land and Refico.
Local businesses have obvious strengths like having lands available and understanding of legal procedures but suffer from weaknesses such as lack of resources, professionalism and transparency.
VIET NAM NEWS/ SIA NEWS NETWORK