Vietnam’s real estate market is picking up steam as the country moves towards admission into the World Trade Organisation (WTO), according to industry insiders.
The number of real estate transactions in the third quarter of the year increased 20% over the first six months of the year, and 25% over the same period last year. The trend indicates that the domestic real estate market is recovering from its long slump.
The prospect of a WTO safety net has inspired new waves of foreign investment in Vietnam, reviving the dormant property market.
“The news of Vietnam’s upcoming WTO membership has spread both at home and abroad,” said Tran Trong Hieu, director of the International Urban Development and Investment Co. “This has helped wipe out many foreign investors’ doubts about the country’s legal system.”
“Those of us involved in investment brokerage began to feel a higher comfort level from foreign
investors after Vietnam’s likely WTO accession was announced,” said Vu Quang Hien, director of the Property Management and Consulting Joint Stock Co (Citiplus).
As real estate investment requires large volumes of capital, investors want the government to ensure the security of their investments and protect their interests, Hien explained.
“When Vietnam joins the WTO, the country will have to abide by international rules that make investment safer,” he said.
Do Thi Loan, general secretary of the Ho Chi Minh City Real Estate Association, said that her association alone had received more than 20 delegations this year from such countries and territories as South Korea, the US, Australia, China, Singapore, Hong Kong and Taiwan.
Most were highly interested in real estate in Vietnam, particularly in major cities, said Loan, and many memoranda of understanding have been signed to develop office buildings, luxury apartments, shopping centres and housing for low-income earners.
Many foreign-invested real estate development projects that have been stalled for some years during the recent slump in the market have recovered on the new foreign investor confidence.
Nguyen Duc Kiet, deputy general director of Hong KongÂ´s Larkhall Group, said the group received an investment license from the Vietnamese Ministry of Planning and Investment (MPI) in 1997, and planned to set up a joint venture with a Vietnamese partner to build an office building in HCM City.
Following the 1997 Asian financial crisis, the project stalled and did not resume until 2005, Kiet said, at which time Larkhall became the sole investor.
“Investment in the project has grown from US$62 million in 1997 to US$125 million at present,” he said. “The scheduled completion date is now in 2008.” Truong Ngoc Dieu, administrative director of the Happy Square project of Taiwan’s Fei Yeul Group, said the group was licensed by the MPI to set up a joint venture with a Vietnamese company in 1995 to build a $468 million complex which would have included an office building, a hotel and a shopping centre, but the project was postponed.
Development resumed in mid-2006 solely under the Fei Yeul Group without the participation of domestic partners.
Many new projects were also being developed, including the Gold Sai Gon Plaza, a joint venture with a Taiwanese company, and Sai Gon Sport City, fully funded by Singapore’s Keppel Lang. The Phu My Hung joint venture also planned a $16 million project to build an additional million square metres of apartments by 2010.
Real estate market experts believed that demand for office and apartment space would mushroom following WTO accession.
“We have received many investors from Tokyo, Singapore and Malaysia who have come to us expressing their desire to invest in Ho Chi Minh City property,” said MarcTownsend, CB Richard Ellis (CBRE) managing director.
Retail shopping centres have also attracted the attention of many investors, said Richard Leech, director of CBRE’s Hanoi office. Many new retail centres such as Hon Ngoc Viet in Nha Trang, the Opera in Hanoi and Hum Ho-Sai Gon in Ho Chi Minh City were under construction, he noted.
Market experts said that land suitable for the construction of large projects has become rare, creating opportunities for some domestic investors to sell or lease land use rights initially obtained for now-failed projects. Sensing the demand, the Asian Commercial Bank’s real estate company last week opened a property transaction floor in Ho Chi Minh City.
Source: Asia Property Report
- Vietnam property market to boom? [THANH NIEN News]
- Vietnam set to join the WTO today [Bangkok Post]
- Real estate market to see new wave of investment [VNEconomy]