The most recent pandemic outbreak proves to be much more severe, and also lasts longer than any enterprises’ prediction, but it is believed that the hardship is pro tem. Data from the Ministry of Investment and Planning showed that despite the negative impact of the pandemic, newly registered capital, adjusted and contributed capital, bought shares, purchased capital contribution from foreign investors still reached 19.12 billion USD as of August 20, 2021. Of which, the real estate business ranked third with nearly 1.6 billion USD.
The result of a survey conducted by batdongsan.com.vn showed that more than 70% of companies in the field of real estate are under the impact of COVID-19. More than 90% are not having enough income cash flow for payment such as office renting fees, salaries, insurances, etc.
Despite the strong outbreak of the Covid-19 wave again from May 2021 in many provinces in Vietnam, foreign investors still invest capital in real estate, as evidenced by the 1.6 billion USD for the real estate sector. Most are companies in Asia. For example, Chinese and Singaporean companies started investment projects in Quang Ninh and Bac Giang. The joint venture of SEA Logistics Partners (SLP) and GLP - China's largest warehouse operation management unit has purchased five industrial land projects in Vietnam. Boustead Projects Group (Singapore) has acquired a 49% stake in KTG Bac Ninh Industrial Development Joint Stock Company for about 7 million USD.
ESR Cayman Limited - the largest logistics real estate platform in Asia-Pacific, and BW Industrial Development JSC (BW) - the leading logistics and industrial real estate developer and operator in Vietnam, have entered a joint venture to develop 240,000 m2 of industrial real estate in My Phuoc 4 industrial park near Ho Chi Minh City.
In 2021, the number of mergers and acquisitions (M&A) projects from foreign investors are not as much as the number of M&A deals between domestic real estate enterprises. But in terms of transaction value, the leading M&A deals are still in acquisitions made by international investors. For example, Phat Dat Real Estate Development and Joint Stock Company acquired 99.5% of shares in Binh Duong Building Investment and Development Real Estate JSC to own the Binh Duong Tower project. Recently, Sunshine Group also acquired phase 2 of the Cocobay Danang project from Empire Group with the ambition of building a 6-star standard complex resort called Sunshine Heritage Danang.
According to the Ministry of Construction, there are many reasons for FDI inflows into the real estate sector. Vietnam has political stability, economic growth and is also a country that has actively improved the investment environment in the past time.
The Ministry of Construction also said that, after the COVID-19 pandemic, FDI inflows into Vietnam's real estate market will be even larger because foreign businesses always believe in Vietnam's real estate market. Besides, with major trade agreements signed, Vietnam can completely compete with other countries in attracting FDI in the region.
Assessing the reasons why foreign investors choose Vietnam, a representative of Savills Vietnam said that foreign investors are seeing huge opportunities in the high-end real estate segment in Vietnam. 30% room to buy luxury apartments in many high-end projects in Ho Chi Minh and Hanoi are always at maximum level. Enterprises from Korea, Japan, and Hong Kong also accelerated their equity investment in many large projects.
Real estate prices in Vietnam are still much cheaper than other cities in the region, attracting foreign investors. The high-end housing market in Vietnam will have to go a long way to have high prices like Hong Kong and Singapore, so the potential for the high-end real estate segment is still great.
According to experts, when the pandemic ends, Vietnam's real estate will be one of the strongest rebounding markets by converging both internal resources from domestic housing demand and external forces, which are investment needs of foreign investors. At that time, real estate prices will surely continue to grow stronger after a period of being restrained by the pandemic.
When the pandemic is under control, and life returns to normal, the market will experience a strong screening. From there, the market will have more depth with those who have real needs and make real investments.
In terms of opportunities and challenges, real estate companies and real estate service providers are also focusing a lot on going online, digital transformation, and automation. Therefore, real estate investors should pay attention to three main areas after COVID-19 is controlled:
Real estate projects with those three areas combined will bring the most practical needs.
The progression of the disease is still quite complicated. Currently, real estate businesses need to focus on developing digital transformation, core values, corporate branding, and providing solutions on applied technology in the field to adapt to the situation.
Source: The Ministry of Industry and Trade
Compiled by VietnamCredit