A coldly picture of foreign invested real estate

Out of the reported sum, the newly registered foreign direct investment (FDI) capital was $1.35 billion and the remaining was contributed by expansion fund.

In the broader picture, the real estate segment was behind only the manufacturing  sector– which was the most attractive and received the most FDI inflows in Vietnam in 2012.

Significantly, the registered FDI in the real estate sector last year was more than doubled the figure of 2011 at around $845 million.

However in comparison to previous years, FDI in Vietnam’s real estate sector has been declining for the last four years.

In 2008, FDI registered in the real estate sector reached a record level of $23 billion. It was then down in 2009 and 2010 to $7.4 and $6.8 billion respectively, according to the report of the Ministry of Planning and Investment’s Foreign Investment Agency.

Among 10 newly registered property projects last year, there are two outstanding investors - Japan’s Becamex-Tokyu joint venture with the  $1.2 billion new township in southern Binh Duong province and Singapore’s Hoa Lam ShangriLa with the $116 million complex of exhibition and health care service in Ho Chi Minh City.

In general, Tokyu is the only new comer to Vietnam’s real estate market last year. Foreign investors from South Korea, Singapore and Malaysia who are recognised to have been dominating Vietnam’s real estate developments for a long time did not have any new projects across 2012. Even, some South Korean companies decided to withdraw from Vietnam’s real estate sector by transferring their projects’ stakes to others.

Difficulties did not come to small companies, but also bigger names. The list of foreign investors in troublesome in Vietnam’s real estate has been lengthened such as Posco E&C and Berjaya. The gloomy situation is easy to understand in the past year as the market has been struggling with sharp downturn.

Remarkably, VinaCapital’s VinaLand Limited announced its withdrawal from some projects and would not invest in new real estate projects in the next three years, except from developing the current projects and restructuring its portfolios.

Meanwhile, many foreign investors would further delay their property projects after many years of preparations such as UAE’s Limitless World Vietnam with the $550 million Halong Star Hotel in northern Quang Ninh province, South Korea firm’s $171 million Booyoung International township, VinaCapital’s $50 million Times Square residential project and UK’s Pacific Land Vietnam with the $1 billion Habiotech project in Hanoi.

On the other side of the coin, property projects of long term strategy and financial strong foreign investors like Keppel Land, CapitaLand, Ciputra, Indochina Land and CT&D Group are going smoothly.

One of the brighter signs is  South Korea’s Daewoo E&C which started its $2.5 billion StarLake township in the west of Hanoi in November last year. The development of the township is expected to be complete in 2019.