09:40 | 06/09/2016 Investment
(VEN) - According to the Ministry of Planning and Investment (MPI), the Vietnamese real estate market has attracted the attention of a growing number of foreign investors. Since the beginning of this year, this market has attracted not only foreign direct investment (FDI) but also indirect investment through mergers and acquisitions (M&A).
In the first seven months of 2016, Vietnam attracted US$12.94 billion of FDI, up 46.9 percent compared with the same period last year. FDI covered 19 sectors with real estate alone attracting US$956.1 million or 7.3 percent of total registered capital, ranking second behind processing and manufacturing industries.
According to the MPI, Vietnam attracted many large-scale FDI projects in the field of real estate in the first seven months. Examples include the Amata City Long Thanh project based in Dong Nai Province with total registered capital of US$309.3 million from Thai investors; and the Midtown project based in Ho Chi Minh City with total investment of US$225.62 million from Cayman Islands.
Vietnam M&A Forum 2016 Organizing Board Deputy Head Dang Xuan Minh said that total value of M&A deals in Vietnam in the first seven months of this year reached US$3 billion, with M&A deals in the real estate market accounting for about US$1 billion or more than 30 percent of the total. Most of M&A deals in the real estate market involved foreign investors.
MPI’s Business Registration Management Agency has reported 1,611 new businesses in the real estate sector, with total registered capital of more than VND120.29 billion in the first seven months of 2016, an increase of 108.7 percent in number of businesses and 301.8 percent in capital compared with the same period last year.
This impressive growth reflected great investor interest in the Vietnamese real estate market, said Nguyen Anh Duong, Deputy Director of the Macroeconomic Policies Department of the Central Institute for Economic Management. However, these results could not tell whether FDI in real estate would continue growing in the long term or just seasonally.
Duong said state authorities should study and determine the effect of FDI in the real estate market on the Vietnamese economy. If FDI increases in this sector do not contribute to the growth of the Vietnamese economy by creating added value and promoting the development of other sectors, the real estate sector’s hot growth would put big pressures on the interest rate, hindering other sectors’ access to credit. This situation happened several years ago.
“State authorities need to tightly monitor capital flows into the real estate market so that they can take timely action to harmonize the capital demand between this and other sectors,” Duong said.
Vietnam M&A Forum 2016 Organizing Board Deputy Head Dang Xuan Minh: The real estate sector has attracted great attention from foreign investors since the beginning of this year.