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FDI is pouring into Vietnam’s real estate market

FDI is pouring into Vietnam’s real estate market

Friday 15, 07 2022
The real estate sector in Vietnam remains an attractive destination for foreign direct investment, as FDI flow into this sector was second-highest in the first half of 2022.

Optimistic growth of real estate FDI

Although the COVID-19 pandemic is still dealing a significant impact on the operation of many economic sectors, FDI inflows into Vietnam continuously grew in the first 6 months of 2022. Specifically, real estate is the second largest FDI-attracting sector in Vietnam.

Assessing the FDI that is flowing into Vietnam, Mr. Do Duy Thanh - Investment Manager​ at Savills Hanoi, said that foreign investors place great confidence in the investment environment in Vietnam. Vietnam, specifically the real estate sector.

Ministry of Planning and Investment

Data from the Ministry of Planning and Investment shows that FDI inflows into Vietnam recorded continuous growth in the first 6 months of 2022. According to the General Statistics Office, in 2021, although the Covid-19 epidemic has taken place with complicated variables, FDI flow into Vietnam still reached 31.15 billion USD, up 9.2% compared to 2020. That shows that foreign investors are placing great confidence in the investment environment in Vietnam.

In particular, the real estate business ranked second in attracting FDI with a total investment capital of over 3.15 billion USD, accounting for 22.5% of the total registered investment capital.

With such results, Mr. Do Duy Thanh assessed that real estate has always been a key economic sector with stable and sustainable growth in Vietnam. Not only industrial real estate, housing, resort, healthcare, etc., are also attracting foreign investors.

Despite possessing the potential to recover and make a breakthrough, the Savills expert still sees that the real estate industry is facing many challenges.

What factors attract investors?

The representative of Savills said that the increasing number of middle and upper-class customers, coupled with the rapid urbanization process in big cities, would continue to boost the demand for housing in Vietnam. Along with that, despite being hit the hardest by the pandemic, resort real estate is also a segment where investors can look for opportunities to enter the market, especially in Phu Quoc, Nha Trang, Phan Thiet, etc.

The representative of Savills

“In addition, the emergence of the healthcare real estate segment, which is still very new in Vietnam, will also be a great opportunity for investors with the vision and ability to seize opportunities. Moreover, foreign investors are also paying special attention to residential and office real estate. This trend comes from increasing customer demand while prices are still reasonable when comparing big cities like Hanoi and Ho Chi Minh City with neighboring markets such as Singapore, Shanghai, Shenzhen, etc. Especially, it is impossible not to mention the breakthrough of industrial real estate, which promises to become a bright spot in the real estate industry in the coming time," Mr. Thanh said.

Aside from opportunities, Mr. Thanh pointed out that FDI inflows into the real estate market also face many difficulties and challenges. Specifically, the amount of FDI registered to the market year by year was not disbursed as promised due to many factors related to the legal system surrounding the project development process. That leads to a delay in implementation.

Another example is there are some new types of real estate that have been and are being interested in many investors, such as condotels and officetels, which have legal regulations that are yet to be fully and promptly issued.

FDI

The representative of Savills Vietnam Investment Department stated that to solve the above problems when entering the market, many foreign investors would often want to cooperate in the form of a joint venture with Vietnamese investors to support the process of handling legal procedures for project development. However, the two businesses do not always find a common voice.

Currently, good-quality projects are also becoming scarce and less widely publicized. Therefore, investors can look to professional consulting units with extensive knowledge in the real estate industry to understand the market situation and access potential projects.

 

Compiled by VietnamCredit

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