Vietnam is still a promising place for foreign property investors despite decreasing trade in the past six months, said a regional research released by CB Richard Ellis Vietnam (CBRE) last week.
Marc Townsend, managing director of CBRE, said Vietnam was slowly becoming a regional player, which is evidenced by international funds who have established presence here and are very comfortable operating in the market.
“As the established investors in Vietnam are still doing deals, investors from outside the region will continue to cast an eye over the opportunities,” Townsend said, adding that foreign investors began to look beyond the traditional, developed, investment markets for investment opportunities in countries in the Asia Pacific region.
The market research company, however, said that bank lending for real estate projects had tightened and that the cash flow was becoming a challenge for a number of developers.
Therefore, many developers in order to resolve the problem of limited credit availability were looking to form joint venture partnerships with foreign investors in order to access capital.
Adam Bury, senior manager of CBRE’s research and consulting department, said that with bank lending being restricted, more Vietnamese developers than ever before were seeking joint venture opportunities.
Bury said there was a notable competition around the region to absorb this inflow of capital as many investors continued to look at the Asian region as an alternative to the weak growth markets.
As an investment destination, Vietnam had plenty of selling points, such as a population density, to attract foreign investors.
“If the age-old problems of access, pricing, and transparency continue to be slowly overcome, we are confident that opportunities for international investors will arise that tempt capital away from some of Vietnam’s more developed neighbors,” Bury said.
The market trend saw some joint venture opportunities since early this year. For example, the Singaporean property group CapitaLand announced in May a joint venture contract with Khang Dien Sai Gon Real Estate Joint Stock Company, contributing 70 percent of the US$70 million required to build almost 1,000 apartments on a 2.9 hectare site in Ho Chi Minh City’s District 2.
The group continued to strengthen its position in the Vietnamese market by spending some US$6 million to take a 65 percent stake in the local developer Quoc Cuong Sai Gon, who owns some 9,000 square meters of land in Binh Chanh District. The project is planned for a condo project with 800 units.
In another project, Malaysian property developer Gamuda Land has recently entered into a joint venture with the local firm Saigon Thuong Tin Real Estate Joint Stock Co. (Sacomreal) to develop an 82-hectare township in HCMC.
The US$215-million Celadon City project is under development in HCMC’s Tan Phu District with a number of apartment buildings for some 7,000 units and other facilities.
In related news to the local property market, the HCMC Real Estate Association (HoREA) hosted a real estate night in HCMC on Friday, talking about the current challenging situation in the market.
Le Hoang Chau, chairman of HoREA, reiterated his standpoint, saying that the government should not classify property development as a non-manufacturing sector because it required different elements such as labor and materials to develop an apartment building.
Chau said the credit crunch had driven a lot of developers into difficulties during the first six months of this year, and many of them were thinking of how to survive rather than to spur growth.
At the event, some participants said the market downturn was offering a good chance to people who want to buy apartments for accommodation as the housing price has decreased because of inflation besides incentives offered by developers.
Most current condo projects are developed on sites which developers bought before the Decree 69 came into force. The decree which requires land use fee to match market price may trigger housing price to increase in the coming time.
Vu Dinh Anh, a financial expert who was a speaker in the event, said buying a house at the moment was a chance to those who do not have to borrow from banks.
In contrast, it would be a burden for those who buy an apartment by using loans because interest rates remained too high, and the housing price had yet come back to its real level.