Real estate in HCM City holds great appeal for foreign investors

Phu My Hung Urban Area in District 7 of HCM City

HCM City has taken the lead in FDI attraction over the last three decades since Vietnam opened its economy to the world, and real estate is one of the sectors receiving most foreign investment.

Among major deals recently, Lotte Group of the Republic of Korea has finalised procedures to invest VND20.1 trillion (US$855.6 million) in a project named Thu Thiem Eco Smart City in the Thu Thiem New Urban Area in District 2.

Also in this urban area, the Empire City Tower project with total capital of US$1.2 billion is now under construction and expected to complete in 2022. It is invested by a joint venture of two Vietnamese companies and the Denver Power Ltd of the UK.

Meanwhile, an over US$400 million project named Thu Thiem River Park is being developed by Hong Kong Land and the HCM City Infrastructure Investment JSC.

According to the HCM City Real Estate Association (HoREA), property has continually ranked first in terms of FDI attraction, absorbing almost US$1.5 billion in 2015, US$1 billion in 2016 and US$1.01 billion in 2017.

Data of the municipal People’s Committee show that as of the end of last year, there were 293 FDI projects worth US$13.97 billion in the local property sector, accounting for 33% of total FDI in the southern city. Most of that FDI capital came from Japan, the Republic of Korea, Singapore, Hong Kong (China), Taiwan (China), and the US.

As of the beginning of September 2018, foreign investors spent US$4.14 billion on contributing capital to or buying shares at domestic firms, and up to 48.2% of the sum involved real estate business activities.

HoREA Chairman Le Hoang Chau said the FDI inflow will remain an important source of investment in the property market in the time to come. It will supplement the domestic capital supply for this field, which is being tightened by banks.

FDI has helped develop world-class hotel projects in the city like Park Hyatt, Sheraton, Sofitel, Times Square and Kumho Asiana Saigon (now Mplaza Saigon).

Many insiders said foreign investors’ attention to the real estate market of HCM City is huge. They seek opportunities to develop housing projects in locations with convenient access to the city’s centre or to purchase projects already put into use to gain a stable money flow.

CBRE Vietnam said the local property market is now very attractive to foreign investors thanks to the city’s fast urbanisation, young population, stable economy with extensive integration, and a growing middle class. Meanwhile, the market is increasingly transparent, allowing investors to easily access information about the market, legal framework and project licensing procedures.

Explaining the FDI influx into real estate, HoREA Chairman Chau said the State has revised policies and law, allowing foreign investors to invest and trade in property in the same way as domestic investors do. Notably, they can buy and own houses at commercial housing projects after legally entering Vietnam.

Echoing the view, Director for investment at Savills Vietnam Su Ngoc Khuong said the presence of foreign investors is currently a trend in the property market. The local market is showing great attractiveness to foreign investors, not only in terms of profit but also economic growth, the policy on foreigners’ house ownership, and incentives for foreign investments.