Real estate piques foreign interest

Vietnamese real estate - Illustration photo

According to Limitless CEO Mohammed Bin Dhabeah, investor in a $550 million hotel complex in Quang Ninh province, favourable location, young population and commitment to providing an attractive business environment for foreign investors is what makes Vietnam an attractive destination for real estate investors.

The Dubai-based Limitless, Dhabeah said, has already seized the opportunity to invest in Vietnam, having identified a gap in the market – the need for high quality developments that provide a solid base for future growth – made all the more attractive by favourable labour costs and land values.

Limitless is developing its first ever project in Vietnam - the mixed-use Halong Star project in Vietnam. Located in one of the world’s most stunning locations, in the UNESCO World Heritage Site of Halong Bay, the project will consist of a residential, retail and hotel facilities.

Dhabeah’s opinion is echoed by other foreign investors. Linson Lim, President, Keppel Land (Vietnam), one of the leading Singaporean real estate developers, said that foreign developers still believe in the potential of long term growth of Vietnam economy.

“Vietnam has young and active population, as well as the stable demand for housing, so there is still much more room for development,” Lim said.

He added that rapid urbanisation, as well as falling interest rates from banks and financial institutions are pushing demand for accommodation.

FDI into real estate in Vietnam has been continuously increasing since 2012 both in number of project and capital investment.

According to the Ministry of Planning and Investment’s Foreign Investment Agency, in the first 11 and a half months of 2014, real estate was the second most popular investment sector, with 35 projects worth $2.54 billion.

Other outstanding cases were Lotte from Korea. After finishing its $400 million Lotte Centre Hanoi complex, this group is commencing work on its Smart Complex in Thu Thiem New Urban Area in Ho Chi Minh City. This $2 billion project will be the biggest property project so far for the group in Vietnam.

Meanwhile, many existing developers are expanding their portfolios in Vietnam. Among those are CapitaLand, Chiaphua Group, Indochina Land, VinaCapital, Sembcorp and Keppel Land.

Reality has shown that well financed and skilled investors are receiving good business result in Vietnam and this will continue as they enhance knowledge their of the market, gain experience and leverage long-term commitment.

Names such as CapitaLand and Keppel Land had expanded their portfolios accordingly. CapitaLand recently drove part of their investment into mid-end apartment projects, with the start of ParcSpring project in Ho Chi Minh City’s District 2.

Meanwhile Keppel Land recently increased its stake in the Estella joint venture up to 98 per cent.

In Vietnam, Keppel Land is one of the pioneers and largest foreign real estate investors with a diverse portfolio of properties in Hanoi, Ho Chi Minh City, Dong Nai and Vung Tau.

Hong Kong’s Sunwah Group, the investor of the existing Sunwah Tower and Saigon Pearl has received an investment licence for its third project in Vietnam - a $200 million residential project in Ho Chi Minh City.

Singaporean-owned Banyan Tree Holdings has consistently focused on high-end products, while its affiliate Laguna Lang Co, recently introduced its reasonably priced Laguna Park development.

“We have seen the recovery signs of the Vietnamese real estate market. Currently the trend to invest in luxury villas has declined, but affordable villas are sought after by customers. The quiet market does not mean that buyers are running out of money, it just means they’re not satisfied with existing options,” said Phan Y Nhi, sales manager at Laguna Lang Co.

In its latest survey released December 2014 Grant Thornton of Private Equity Investment in Vietnam said that education, real estate and property, food and beverages and retail are, again, the leading sectors in terms of attracting investment.

According to the survey, real estate has begun to show more optimism as trading volumes have picked up, mostly in the low and medium-end segments.

“Many foreign investors are increasingly positive about the market’s prospect due to the recovery of the economy, and there is growing demand for housing from locals

and foreigners following the housing legislation that have just passed by the National Assembly in November 2014,” the survey said.

More projects are in the pipeline awaiting approval. Thailand’s Amata Group in August signed a memorandum with Dong Nai People’s Committee to develop Amata City Long Thanh with total investment capital of $530 million. Taiwan’s Lucky Cement is also waiting for its licence of $1 billion golf course.

US-based Rock Rose Group, a Rockefeller family-backed alternative investment management firm has also signed an agreement with Vung Ro Petroleum to develop a $2.5 billion real estate complex in Phu Yen province.