Property market inspires belief
The speed of Vietnam's property market's turnaround has been described as startling. What was, only four years ago, a sector on its knees is now the rising star of Southeast Asian real estate.
The speed of Vietnam's property market's turnaround has been described as startling. What was, only four years ago, a sector on its knees is now the rising star of Southeast Asian real estate.
The fillip is largely due to improving fiscal conditions. Real estate company Jones Lang LaSalle reports that Vietnam's economy grew by 6.8 per cent in the third quarter of this year, climbing from 6.4 per cent in the second quarter, and 6.1 per cent in the first, supported by foreign direct investment (FDI), which jumped by 53.4 per cent, to US$17.2 billion during the January-September period this year. The real estate sector is cited as the second-highest recipient of this FDI inflow, behind only the processing and manufacturing sectors.
Confidence is also reflected in the number of newly registered enterprises nationwide, which jumped by 28.5 per cent, and the volume of property sales, which has on average doubled in the past year, enabling developers to halve their unfold inventory left over from the previous slump.
CBRE says the number of apartments sold in Hanoi in the third quarter swelled by 154 per cent compared to the same period last year, while in Ho Chi Minh City, sales grew by 88 per cent. Marc Townsend, managing director of CBRE Vietnam, credits the strong economy, and Vietnam's further integration into the world through trade agreements, as spearheading FDI inflow into the property sector.
Recent major deals, he explains, include notable investments by two Hong Kong entities: Chow Tai Fook's US$4.4 billion purchase of a controlling stake in Hoi An casino resort, and private equity firm Gaw Capital Partners' acquisition of four projects in Hanoi, Da Nang, Quang Nam and Ho Chi Minh City.
Local buyers have boosted demand in the condominium sector, but a relaxation of laws around foreign investment, effective since July 1, has proved pivotal, allowing foreigners holding valid visas, and foreign companies and organisations registered in Vietnam, to purchase unlimited numbers of apartments and villas.
