Taiwan’s trailblazing property projects show the way ahead

Started by Taiwanese giants

By Nguyen Hoai An Director, Hanoi branch CBRE Vietnam

Foreign investors have long been a major driving force for not only the real estate market but the overall development of the socio-economic landscape in Vietnam at large.

Early entrance made by international developers such as Central Trading and Development Group (CT&D), a Taipei-based company formed by a group of international entrepreneurs, inaugurated several modern and high-quality real estate developments. This included the spectacular transformation of a ­several-hundred-hectare swampland into the modern Phu My Hung urban area in Ho Chi Minh City 22 years ago.

This iconic project ­showcased just how far foreign know-how and expertise can reach and lead to the evolvement of the extensive infrastructure system around the area. For instance, the foreign-invested, 17.8 kilometre long and 120 metre wide Nguyen Van Linh Parkway, has become a major artery of the city’s economy.

These projects have created a more complete infrastructure system and instigated positive changes for a more business-friendly environment in the Vietnamese real estate industry.

In addition to these urban area and infrastructure projects, Taiwanese investors have also reported significant advances in industrial real estate and energy, and announced plans to enter northern Vietnam. The establishment of major townships contributed significantly to the improvement of the overall master planning of core cities such as Ho Chi Minh City and Hanoi, while elevating living standards.

Opening the doors for foreign investment put local developers in a more competitive scene, pushing them to enhance product quality and pursue greater innovations. This resulted in a better pipeline of products to meet the rising demand for both residential and commercial properties – an improvement which, in turn, attracts further foreign companies from Taiwan and around the globe.

Vibrant market

Taiwanese real estate projects have contributed significantly to warming up the Vietnamese real estate market and attracting new waves of foreign investors, to the point that the domestic market is now a hotspot for both residents and investors.

The demand for housing in Vietnam, especially in Ho Chi Minh City and Hanoi, is rising quickly. This is due to the population of more than 96 million people, about 20 per cent of whom live in the metropolises of Ho Chi Minh City and Hanoi. The high pace of urbanisation is one of the key drivers of the strong housing demand, which is expected to be sustained in the foreseeable future.

Vietnam recorded a rapid increase of urban population (3.2 per cent on-year on average) in the past several years, although there remains potential for further urbanisation as the current rate is lower than many neighboring countries.

In addition, the residential demand from overseas investors has been fuelled by foreign investment inflows.

Vietnam is expected to benefit from the relocation of factories from China to Southeast Asian countries. This leads to the growth of expat communities in Vietnam, complementing the rising demand for industrial real estate. Over the past 12 months, land and warehouse rentals have increased by 10-15 per cent on average. Certain locations and certain quality assets have seen rents surge by 20-30 per due to the quickly rising demand.

The market also drew the attention of overseas investors by its attractive price points, positive return prospects, as well as strong market confidence due to Vietnam’s growth momentum.

These factors have prompted Taiwanese developers to expand their scope from the southern areas and begin looking to the north, to provinces like Hoa Binh and Bac Ninh.

By acquiring poorly performing projects from domestic developers, Taiwanese real estate giant Phu My Hung Development Corporation, a member of CT&D, has officially set foot in the north, and is expected to stir up the market. The developer has already acquired a 450-hectare project in the northern province of Hoa Binh and is planning to construct an eco and tourism urban area. Phy My Hung also acquired a 198ha area in the northern province of Bac Ninh.