Real estate sector attracts growing FDI

10:53 | 09/08/2017 Investment

(VEN) - Nineteen economic sectors in Vietnam have attracted foreign direct investment (FDI) over the years, with the processing and manufacturing industries taking the lead. The real estate sector is now also a top player in the FDI market.  

Foreign investors’ growing interest in Vietnam’s real estate sector is partially attributed to rapid urbanization

According to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA), in the first half of 2017, Vietnam attracted 618 real estate FDI projects totaling US$50.99 billion in registered capital, accounting for 16.6 percent of the country’s total foreign investment in value.

Phan Huu Thang, former director of FIA and deputy chairman of the Vietnam National Real Estate Association (VNREA), says most real estate FDI projects are large in scale and many have capital of billions of US dollars.

For example, the Thai Amata Group has invested more than US$600 million in industrial real estate in Dong Nai Province, while Japan’s Mitsubishi Corporation has entered into a joint venture with the Bitexco Group to develop a US$300-million housing project in Hanoi. Japan’s Kajima entered into a joint venture with Indochina Capital to prepare for investing US$1 billion in Vietnam’s real estate market in the next 10 years.

Marc Townsend, former general director of CBRE Vietnam, says that while other countries are facing economic and political turmoil, Vietnam has the advantage of relatively high economic growth and political stability. This is the reason foreign investors are interested in investing in Vietnam, he says.

Data from the Ministry of Planning and Investment show that in the first half of 2017, the real estate sector attracted an additional US$700 million plus to existing projects and 39 newly-registered projects. Phan Huu Thang, former director of FIA and deputy chairman of VNREA, predicted that real estate will continue to attract foreign investors.

Vietnam has a population of nearly 100 million, while accelerating economic growth, urbanization and industrial development have resulted in an increasing demand for housing.

Apart from the demand, economic growth and political stability, economic experts attribute foreign investors’ growing interest in Vietnam’s real estate sector to the country’s improved investment promotion policies.

However, economists say the licensing of real estate projects needs to be tightened, and each project needs to be carefully verified in terms of socioeconomic impact, implementation feasibility and environmental impact.

Nguyen Hoa