Foreign investors prop up real estate market

The country’s property market has attracted $1.69 billion in foreign direct investment (FDI) to 19 new projects and a total of $1.81 billion to seven capital expansion projects in the first nine months of 2015, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

With the revised laws on Housing and Real Estate Business coming into effect in July this year, foreign investors are encouraged to invest in the Vietnamese property market. According to the new legal framework, foreign investors can now have access to land for developing housing-for-sale projects, as well as lease and then sub-lease their properties.

Moreover, the successful negotiation of TPP rights last week is expected to support the growth of the country’s economy and increase the FDI inflow to the property market.

Apart from the foreign firms which have been investing in the Vietnamese market, such as VinaCapital and Indochina Capital, a range of new arrivals have been eyeing the market. Among these are Gaw Capital Partners, Creed Group, and GEM. Capital from South Korea, Japan, Singapore, South Korea, and Hong Kong has been the most active in the real estate sector, and the investment sentiment will only increase in light of the new regulations. Japan, in particular, has been emerging recently as a new foreign real estate investor in Vietnam, implementing a range of projects.

According to Troy Griffiths, deputy managing director of Savills Vietnam, the freshly signed TPP was expected to bring advances to the Vietnamese real estate market.

“While it takes a longer time to evaluate the impact of the TPP, the long term impact for Vietnam is to leverage up trade maturity, investment potential, and economic co-operation,” Griffiths said.

Griffiths added that in the real estate sector, commercial segments in particular would soon be positively impacted by the TPP, as offices and apartments for lease and logistics would bolster efforts to meet the increasing demand of international investors and companies to set up and expand business in Vietnam after the signing of the TPP.

An outstanding project is Empire City, with the total investment of $1.2 billion in Thu Thiem new urban area in Ho Chi Minh City. As a joint venture from Britain Denver Power and two domestic investors, this project will develop an 86 storey building to be a new landmark in Ho Chi Minh City.