Real estate market: magnet for foreign investors
Property investors in Vietnam have been scaling up their business, while more and more new investors have concluded M&A deals in the real estate sector.
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A Q2 market report released by Savills Vietnam showed that many foreign investment funds have spent big money to acquire land plots in advantageous positions to develop high-end projects.
M&A activities are especially active in HCM City, attracting 40.9% of total FDI to Vietnam.
Creed Group has teamed up with An Gia Group to acquire five apartment blocks of La Casa project in district 7 in a deal worth VND910 billion.
Kajima has joined forces with Indochina Capital to set up a joint venture with investment capital of US$1 billion which will develop four high-end projects in HCMC, Hanoi and Da Nang.
Foreign investment funds are also pouring money into “golden land” plots in HCMC. Frasers Centrepoint Ltd has acquired a 70% stake in G Homes project from An Duong Thao Dien Group.
CapitaLand has acquired a land plot in the center of district 1 on which it plans to build a 240 meter tower, expected to become the tallest shopping center in HCM City.
The fund has also announced the purchase of a 90% stake of a 0.8 hectare project in Thao Dien to develop 300 high-end apartments. The investment is part of the Singaporean group’s plan to inject US$500 million into commercial real estate projects in Vietnam.
The foreign capital flow into real estate is described by experts as ‘more substantial and feasible’ than in 2011-2013. Investors are ready to disburse funds for M&A deals and start developing projects in order to launch products on the market as soon as possible.
From 2018, Vietnam will no longer receive preferential ODA loans from WB, ADB and other financial institutions at preferential interest rate of 2-3%. The interest rates will be 5-6%, not including the service fee.
Mid-end products top the list of property products with the highest liquidity, attracting the most foreign investors.
The demand for mid-end products is expected to continue to rise as Vietnam is now experiencing the ‘golden population index’, with the number of people of working age expected to reach 5.5 million by 2019.
The birth rate decline in the population restructuring period from 1979 to 2015 led to a fall in the proportion of people aged below 15, from 42% in 1979 to 25% in 2015.
Meanwhile, the proportion of people of working age rose from 53% to 68.4%.
A survey by CBRE attributes the increased interest by foreign investors in Vietnam real estate to macroeconomic factors and high initial yields. Most investors are setting up joint ventures with Vietnamese investors.
