FOREIGN CAPITAL BOOSTS REAL ESTATE MARKET

During the gloomy market period, many foreign investors have still poured money into the housing projects, offices, luxurious hotels as they believed that customers of this segment were less affected during crisis period and Vietnam was at the bottom of the real estate cycle.
 
Recently, in early June of 2015, Jen Development Company, a real estate investment fund of Hong Kong, launched luxurious villas worth more than VND50 billion each in Thao Dien Ward, District 2 .
 
Construction & Investment Joint Stock Company Hung Viet and the Korean Real Estate Development KRDF03 Funding (KRDF) (Hung Viet & KRDF03) also said that Korean investment fund has invested 50 percent of the total capital out of US$130 million into Vietnam market. This company is still looking for projects on the medium and advanced segment to disburse in the coming time.
 
Keppel Land Company of Singapore, which has operated in Vietnam for a long time, has been implementing up to 18 real estate projects with the total registered capital of nearly US$2 billion and putting their efforts on high-value housing market. Keppel Land is investing in Riviera Point projects in District 7, Saigon Centre complex in District 1, Estella 1 apartments in District 2. Sunwah Group of Hong Kong, another Asian investor, repurchased Land 90 Nguyen Huu Canh in Binh Thanh District to build high-end complex. Sunwah announced owing 48 percent of share in the project in total investment over US$200 million.
 
Addition to luxury projects, Ho Chi Minh City, typically Korean investors in District 9 also attracted foreign investors to invest in the intermediate segment and the service real estate segment. A survey for the last 2 months disclosed that the Koreans bought on an average of 40 units/ month, the transaction rate increased sharply within the last two years which resulted from the fact that Samsung built a US$1.4 billion factory in Ho Chi Minh City in May. Besides that, the Housing Act, allowing individuals and foreign institutions to buy houses in Vietnam and ensuring property rights for this group, is about to take effect in July and has bolstered confidence among Korean investors.
 
The investment fund also reflects that the calling for foreign investment in the property market is easier than the previous period. Foreign investors foresaw an opportunity to profit from Vietnam’s real estate market in the recovery trend of Vietnam. At the recent Vietnam-Singapore Business Forum, Managing Director of Savills Vietnam, Neil MacGregor analysis that Vietnam was at the bottom of the real estate cycle while many other markets in Asia were at the top of the cycle and might decline in coming years. Thus, Vietnam attracts foreign investors because they want to take advantage of the recovery of this market while other markets started to show cooling signs.
 
As for resorts or 5-star hotels, foreign capital flows also increased. The first quarter of 2015 recorded some new projects with billions of US dollars registered to invest in the central provinces. Typically, Rose Rock announced to invest US$2.5 billion in luxurious hotels or apartments in Tuy Hoa, Phu Yen. The billionaire Israel - Igal Ahouvi invested in Alma Resort, comprising 200 villas and 400 apartments at Dragon Beach resort, Cam Ranh, Khanh Hoa. Selling holiday package of Alma attracted a large number of people who want to upgrade their quality of life through high-standard holidays.
 
Another factor which boosts Vietnam’s real estate market is remittances. A financial expert said: Compared with 2013, the amount of remittances flowing into the real estate market in 2014 only slightly increased from nearly 0.5 to 0.6 percent. However, with positive signs of the real estate market, it is possible that the amount of remittances will increase more. In late 2014, the proportion of remittances in real estate was around 21.2 percent, and up to 23 percent - 24 percent at the end of this year, as is forecast.
 
Besides the warming trend of the market, factors that attract remittances also come from policies on foreigners and overseas Vietnamese to own houses without limitations in Vietnam. This provision dismisses risks as Vietnamese overseas can own their property legally.
 
The Vietnam real estate market has experienced 5 years of recession, the market has been struggling through the bottom and showing positive signs of recovery due to the increase of foreign investment. Foreign capital flows are returning to promote the warming trend of the market.

Source: VCCI