FDI continues to invest in Vietnam’s real estate

Tuesday, 2017-08-22 10:07:48
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Vietnam is witnessing an increase in the value of real estate projects. (Credit: kinhtedothi.vn)
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NDO – The domestic real estate market continues to receive hundreds of millions of dollars from foreign investors, mainly through mergers and acquisitions (M&A), Savills stated.

According to a recent report by the UK-based real estate services provider, in the first six months of 2017, Vietnam continues to attract significant foreign direct investment (FDI). Disbursed FDI reached US$7.72 billion which is up 6.5% over the same period last year, while registered capital was estimated at US$19.22 billion, up 54.8%.

According to Savills Vietnam, the increase in FDI is largely focused on the manufacturing sector and producing results in the field industrial infrastructure development. In May, Hemaraj Land&Development of Thailand and Cienco 4 of Vietnam officially confirmed their cooperation to set up a US$1 billion industrial park on 3,200 ha in Nghe An province.

The report stated that, in addition to being the engine of industrial infrastructure development, FDI also contributes to the growth of other segments in the real estate market. Both office and hotel areas show high demand, with increased rental space and stable rental performance.

Savills Vietnam stated that while these segments are becoming increasingly attractive, active assets are getting more attention from investors, with the exception of new projects in prime locations in the centre of Ho Chi Minh City and Hanoi. However, with limited supply, the market is witnessing an increase in the value of real estate projects in all segments.

Japanese investors are active in the market. Nishi Nippon and Hankyu cooperate with Nam Long to build a 26 ha Mizuki Park residential project in Binh Chanh district, Ho Chi Minh City, with total investment reaching up to US$351 million.

In addition, famous Japanese retailer Aeon Mall officially cooperated with BIM Group to develop the second shopping centre of Aeon in Hanoi with an area of 16.7 ha, at an estimated total capital of US$200 million. Son Kim Land has also successfully called for US$100 million in project development from Japanese investors.

Dr. Su Ngoc Khuong, Director of the Investment Department under Savills Vietnam, stated that M&A continues to be a form that the majority of investors will use to enter the Vietnamese market.

This continues to be an essential trend as the market becomes more mature and investors will have to show their skills and experience to gain opportunities for cooperation to participate in projects that display value and potential.