A huge amount of foreign investment
registered in real estate sector fails to tell the true story of developers’
confidence in Vietnam.
While
foreign direct investment (FDI) commitments in urban and residential apartment
projects from 2012’s January to April accounted for one-third of all registered
capital in Vietnam, real estate remains a turn off for many foreign developers.
The
Ministry of Planning and Investment’s Foreign Investment Agency reported that
$1.576 billion in FDI was committed for real estate developments this year,
accounting for 36.9 per cent of total FDI commitments. This proportion in real
estate, 36.9 per cent, is much higher than the 5.8 per cent in 2011.
However,
the figures are misleading.
Only
two new and two expanded real estate projects were registered by foreign
investors during the period. Japan’s Tokyu Group, through a joint venture with
domestic Becamex Corp, registered to build a $1.2 billion new urban project in
southern Binh Duong province. The rest, $376 million, was registered by three
other developers.
Phan
Huu Thang, director of Centre for Foreign Investment Studies at Vietnam
National University, said that foreign investors recognised that real estate
was still a ‘risky sector’. “The modest number of projects registered implies a
lack of confidence in real estate,” he said.
The
price of residential apartments in Hanoi in 2012’s first quarter dropped
7.1-12.8 per cent on-year according to CBRE and at the same time, prices in Ho
Chi Minh City dropped 2.1-9.4 per cent.
About
half of the apartments in Hanoi are being sold for less than $1,000 per square
metre, the lowest price since the 2007 residential market boom, CBRE said.
Singapore’s Keppel Land said that a subdued sentiment continued to affect
residential sales in Vietnam.
Alex
Loh, chief resident representative of SP Setia in Vietnam, said the gloomy
market and current economic challenges were eating away at homebuyers and
developers’ confidence in Vietnam.
Even
when Malaysia’s SP Setia sought opportunities to acquire stakes in existing
projects with domestic developers, Loh said: “[This is still] not a good time
to start a new project in Vietnam.”
Thang
said foreign developers would invest more in real estate when the market
rebounded. But, based on economic growth, a tightened monetary policy for
property and a drop in homebuyer confidence, he said developers would sit on
the fence.
From
2007-2010, a large proportion of FDI in Vietnam was in real estate, but most
for tourism property projects that cost billions of dollars. Since early 2011,
there have been no multi-billion-dollar property projects registered in
Vietnam, except for Tokyu Group’s project.
Lloyd
Nathan, chief executive officer of Asian Coast Development - the developer of
the $4.2 billion Ho Tram Strip project in Ba Ria-Vung Tau province, said making
a profit from such big projects was difficult.
“At a
macro level, the 2009 global financial crisis obviously presented a challenge
for developments around the world, as does the current instability in the
global economy,” he said.
Ninh
Kieu | vir.com.vn
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com
No comments:
Post a Comment