Overseas Property Blog :: guide to international real estate investment

^{Trung Hoa Nhan Chinh Residential Towers in Ho Chi Minh City}

Vietnam is facing yet another invasion, this time from foreigners armed with capital.

Local Vietnamese investors are currently experiencing difficulties obtaining finance from Vietnam based banks tightening their lending criteria. This has created “Golden opportunities” for foreign investors according Vietnam based news website VietNamNet Bridge.

^{Ha Noi, Viet Nam}

A State Bank of Viet Nam official said, “ Ho Chi Minh City’s real estate market is accounting for around 35 trillion VND or 10 percent of the total loans offered by commercial banks operating in the city.”

Ho Huu Hanh is a director of the State Bank of Viet Nam’s Ho Chi Minh City branch. He also said that since early this year, despite the fact that commercial banks have raised their lending interest rates by 0.05-0.15 percent a month, they have also seen an increase in the number of clients queuing for loans to invest in the property market.

By the end of 2007, the An Binh Commercial Joint Stock Bank had lent property developers 1.2 trillion VND, which accounted for 20 percent of its total lending. The rate was also similar at Sacombank, Techcombank and ACB.

As Singapore’s property market begins to slow, many Singaporean property investors are beginning to cast their eyes over to Vietnam as the next likely boom market.

^{Ha Noi Opera House}

Vietnam’s political issues seem to be well in the past now and the country has experienced steady, stable growth for the past few years. Recent statistics suggest demand heavily outstrips supply at present, as the Vietnamese standard of living is rising, whereas the property supply is low. Apartment and office rentals are experiencing an average of 95% occupancy, suggesting room for expansion.

CB Richard Ellis’ recent report states that Hanoi has only 4,934 hotel rooms rated at three to five stars, which is extremely low when compared to Bangkok at over 20,000.

At the end of July we briefly mentioned Vietnam as an example of industrial development as an indicator to spotlight possible real estate opportunities, noting that the government were relaxing the rules on foreign direct investment in property to a limited extent. While there certainly seems to be a lot of opportunities in investing in Vietnho+chiam generally, the picture regarding real estate investment remains relatively obscure. Vietnam has been liberalising it economic system since the mid 1980s when the government embarked on its programme of ‘renovation’. Growth in recent years has been rapid and compared to India, China or the Philippines there has been greater success in removing extreme poverty measured by the numbers of people living on less a dollar a day. However, investors need to remember that Vietnam is a one-party state and the country’s rulers seem to be taking a cautious attitude to opening property investment to foreigners, in the interests of maintaining their own ability to influence economic development.

^{Ho Chi Minh City landscape [photo credits to waa on flickr]}