The property sector in Ho Chi Minh City has in recent years attracted billions of dollars worth of foreign investment due to its growth potential, real estate consulting companies have said.
The city was recently named among the top three markets for property investors in the Asia Pacific by the US’ Urban Land Institute and global professional services firm PricewaterhouseCoopers.
Last year it attracted foreign investment of US$8.3 billion, a 39.45 per cent surge from 2018, according to its People’s Committee.
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Manufacturing accounted for 40.14 per cent ($3.33 billion) of it followed by real estate sector with 25 per cent ($2 billion).
Last year Phát Đạt Real Estate Development signed an agreement worth $22.5 million with Japan’s Samty Asia Investments Pte. Ltd to develop property projects with a focus on the city.
Singapore’s Keppel Group broke ground last November for Saigon Sports City, a 64ha smart township project in District 2.
To cost an estimated $300 million, the development, which will have some 4,300 apartments and a sports, entertainment and lifestyle hub, is scheduled for completion in 2027.
Keppel has received licenses for 20 other property projects with a total investment of more than $3 billion, most of them in the city.
Phú Đông Real Estate Group Joint Stock Company said it had tied up with three Japanese companies for a joint venture to develop housing projects in the city.
Korea’s SK Group has bought stakes worth $1 billion in giant developer Vingroup, SonKim Land raised $121 million from a group of investors including EXS Capital, ACA Investments and Credit Suisse AG.
Yamaguchi Masakazu, chief representative of Japan’s Creed Group in Vietnam, said demand for real estate in Vietnam remained high, especially in the mid-priced segment.
“The demand is expected to continue rising for the next 30 years.”
Magnet for foreign investment
Analysts said the Ho Chi Minh City property market would remain a magnet for foreign investment this year and in the coming years.
Nguyễn Hoàng, director of DKRA Vietnam’s R&D division, said, “I think real estate will this year continue to be one of the biggest beneficiaries of foreign capital.”
In recent years the sector has consistently ranked second or third in terms of attracting FDI.
Foreign investment would help meet developers’ demand for funds as the Government tightens credit flowing into the property sector, Hoàng said.
Besides, foreign investors would insist on higher standards, which would require Vietnamese property businesses to raise their standards and improve transparency, he added.
Amid a trend of relocating production facilities from China, with Vietnam becoming one of the favorite options for many corporations, industrial real estate is among the segments to attract foreign investment.
Industrial real estate rents rose significantly in several provinces last year.
HCM City has been one of the beneficiaries of the shift in manufacturing capacity away from China.
But the city property sector has also been hit hard by the difficulty in getting approval for new projects while there is little or no land left for development in the inner city.
Some Vietnamese businesses are now capable of competing with foreign investors in the high-end and luxury segments, but their number is limited to players like Novaland, Vinhomes, SonKim Land, and Refico.
Local businesses have obvious strengths like having lands available and understanding of legal procedures but suffer from weaknesses such as lack of resources, professionalism and transparency.
By VNS/ The Realtor