Vietnam Emerging as Property Investment Destination
As Vietnam's economy improves so is the property market, attracting investors from countries including Singapore, Japan and the Republic of Korea.
According to Neil MacGregor, Managing Director of Savills Vietnam, property buyers from South East Asia now see Vietnam as an important investment destination.
Addressing the Vietnam-Singapore Business Forum in Ho Chi Minh City (HCMC), Macgregor said that as a direct result of economic improvements, the real estate market has bottomed out.
Savills are now predicting bright prospects for the second half of 2014 and into 2015, with increasing investment in residential buildings as well as hotels and offices. Vietnam is in direct contrast with some other Asian markets which are currently overheating, with prices set to correct dramatically in the future.
After long periods of due diligence and negotiations, several successful transactions have been announced in Q1 2014 including plans by developer Novaland Group to invest VND3.7trillion (US$176.2m) into three residential projects under construction in HCMC according to Savill's latest Asia Pacific Investment Quarterly report.
Neil MacGregor said that "while the market has a strong appetite for operating assets with stable yields and lower risks, the distressed property seekers are active, especially local development/investment groups utilising their local knowledge and networks".
"Savills continues to see residential development projects changing hands, including not only the apartment sector but also the landed property sector and township projects around HCMC and Ha Noi. This is, in part, a reflection of the rise in confidence from investors in the potential of Vietnam's residential market with rapid urbanisation, a growing middle class and over 50% of the nation's population under the age of 30," he added.
"With a further interest rate cut by the state bank in March and creative promotion schemes from developers, the apartment sector continued to see improving liquidity across all grades."
Measures to improve Vietnam's economic position include a VND30 trillion (US$1.4bn) stimulus package from the government and the creation of a partnership between investors, contractors, building material suppliers and local banks, supported by the state bank and creating new credit flows for the market and help banks to manage their capital effectively.
Q1 GDP increased by a healthy 4.96% and disbursed foreign investment by 5.6% to US$2.85bn year-on-year and inflation fell to 4.39%, the lowest level since November 2009.
Neil MacGregor concludes that "Vietnam's economy is seen to be on the road to recovery, with the property market following close behind".