Vietnam real estate continues attracting FDI

10:46 | 05/05/2015 Economy

Last year, foreign direct investment (FDI) in real estate accounted for 40% of Vietnam’s total foreign investment.

Vietnam real estate continues attracting FDI

The real estate sector came in second to processing and manufacturing in FDI attraction.

Thanks to various favourable conditions for the development of the real estate sector in Vietnam, this year the sector should remain an attractive investment channel among foreign investors.

Statistics from the Foreign Investment Agency (FIA) of Vietnam's Ministry of Planning and Investment show that in the four months leading up to May it has issued investment certificates for 10 new projects with total investment of US$327 million.

During the January-April period, 19,000 new real estate ventures were registered, a rise of 49% against last year’s same period.

The results of a recent survey by Savills Vietnam in turn reflect the housing price index (HPI) in Hanoi has increased only modestly during the first quarter of the year, which is a positive development.

Su Ngoc Khuong, an expert in the field, explains the situation: “Vietnam’s real estate market has been viewed as reaching its bottom. This presents an opportunity for foreign investors to speculate in Vietnam's real estate market.”

Khuong said that he like many economists believe that in 2015, Vietnam will see a surge in FDI inflow into real estate because the market has been on a recovery trend with good growth on a basis consistent with the overall economy in general.

More opportunities should open when Vietnam joins the Trans-Pacific Partnership and other free trade agreements. Revised laws on housing and real estate business have loosened regulation, creating more opportunities for foreigners to invest in Vietnamese real estate.

Nguyen Huu Cuong, chairman of the Hanoi Real Estate Club, has said: “the amended laws now allow more foreigners to buy and own houses in Vietnam. This provides a chance for flourishing investment by foreign investors in Vietnam's real estate sector in 2015.”

Real estate is a way to absorb large amount of remittance into Vietnam. 20% of the 10 to US$13 billion in the annual remittance to Vietnam flows into real estate.

Nguyen Hong Son, head of valuation and financial advisory of the Savills Hanoi real estate company, told us “We’re in an international integration process which is guaranteed by the government’s commitments to loosen administrative procedures.

We think there will likely be greater capital inflow from both domestic and foreign investors into the real estate sector in 2015. Investors and banks both seem ready to invest in the sector.”

For his part, Dr Tran Kim ChungCentral Institute for Economic Management (CIEM) Vice President said from late 2014 to the first quarter of this year, the real estate market has shown signs of recovery.

Chung attributed the positive results to the National Assembly’s efforts to adopt many legal documents related to business, investment, public investment, housing, real estate trading, and land law.

Particularly, the Housing Law made a breakthrough as it allowed foreigners to buy and own houses in Vietnam, demonstrating that the country deeply integrated into the global economy and took advantages ahead the ASEAN Economic Community (AEC) and the Trans-Pacific Partnership (TPP) Agreement.

In addition, a series of documents have been issued to help remove difficulties for the market. Banks pushed up credit for real estate through offering more loans, and lowering interest rates.

Chung added that the economy grew positively while inflation rate was contained low, which helped the property market heat up. However, to spread the pervasion to the economy many challenges remained.

                                                                                                                                                                      Source VOV News