FDI inflows to Vietnam shift to realty projects
Foreign direct investment (FDI) is now believed to be the only escape for Vietnamese businesses in real estate sector.
Plenty of world’s large corporations are seeking an opportunity to set foot in Vietnam’s real estate market. Recently, the American billionaire, Jay H.Shidler who is the founder of the Shidler Group, an American commercial real estate investment company, on his trip to Vietnam in late July 2011 has indicated his intents to invest in property investment particularly in office building and warehousing segments.
Earlier, around US $100 million was contributed to various projects of Khang Thong Group, the investor of Vietnam’s Happyland Entertainment Complex by five large American and Hongkong corporations, which may signal a bright outlook for the realty market amid financial difficulties.
According to Troy Griffiths, Country director of Savills Vietnam, Vietnam property market is rather young yet potentially promising. “Significantly increased supply of office space in a short period with higher rentals has added pressure on price adjustments. Also, the hospitality market has suffered due to oversupply, yet three-star hotels have achieved satisfactory performance thanks to the abundant source of local visitors”, he analysed.
Park Chun Seon, director of Inpyung, the main investor of Cleve high-rise apartment project in Van Phu new urban area considered the current investment slowdown in Vietnam’s property market short-lived. In the long run, Korean investors are expected to further pour capital in this potentially lucrative market.
Recently, a cooperation agreement on approach in identifying investment opportunities in Vietnam’s real estate market has been signed between Indochina Capital and Orix, the Japan’s largest financial services group. “Vietnam’s realty market has proven to be the attractive destination thanks to economic recovery accompanied by remarkable economic growth, rapid urbanisation and the emerging middle class. Despite challenging investment climate, the market is increasingly popular with global companies”, said Peter Ryder, CEO of Indochina Capital.
Previously in an analysis with Investment Newspaper in early March, Richard Emerson, Head of Investment at Savills Vietnam, Hanoi branch, predicted growing competitiveness of Vietnam’s industry and manufacturing sector as a result of lower input costs. The coming times would witness much more significant investment in industrial zones from Japanese, Singaporean, South Korean and Taiwanese investors who are well aware of advantages of establishing manufacturing sites in Vietnam over other regional nations particularly continuously weakening dong against US dollar. As a result, soaring FDI could be seen in the times to come, which would in turn bring about golden opportunities for development of concerning utilities such as housing, trade and other services.
Category: Business
