Friday 13 July 2018

WHY REAL ESTATE IN VIETNAM?

Posted by at 2:42 PM

WHY REAL ESTATE IN VIETNAM?

According to data from the Foreign Investment Agency (the Ministry of Planning and Investment), in the first five months of 2018, foreign investors have invested in 17 industries, of which real estate is the second largest sector. with investment capital of US $ 1.07 billion, accounting for 10.8% of the total investment capital registered.

What has made the attraction of the real estate market in Vietnam for foreign investors?

1. A solid foundation is a good macroeconomic situation.

Compared with Asian countries, economic growth in Vietnam is really a prominent spotlight. With forecast growth at 6-7% over the next decade, Vietnam is one of Asia's best-growing economies. The advantages of population size, young population structure, level of urbanization, and the increase in consumption of Vietnam are high in comparison with other countries in the region.

The Government of Vietnam has been implementing measures to control inflation, which is no longer a risk to the economy as before. At present, the government has set strict inflation targets, below 5% per year. Thanks to this effort, the CPI rose 3.53% in 2017, below the target of 4%. The current stable inflation is a good condition for investment capital both at home and abroad.

2. Infrastructure development

Strategies on infrastructure planning also create a considerable attraction for the real estate market. Major infrastructure improvements continue to be developed. For example, HCMC has planned and built bridges connecting Thu Thiem with neighboring districts. The first of the six metro lines in Hanoi is scheduled to be operational by 2018. The gradual improvement of infrastructure and road links in major cities and satellite towns will help. The move to the inner city is shortened, which is the premise for the formation of real estate projects in the coming years.

3. The legal framework and investment incentive policies

The Law on Real Estate Business and the amended Housing Law of 2014 have significantly improved the investment prospects of the market. These laws allow foreign businesses to freely invest, develop, operate and trade real estate in all segments. The clearer and more consistent legal framework have encouraged investors to seek their position in the Vietnamese market.

4. The segments of the real estate market in Vietnam are also promising potential for foreign investors.

The young, fast-growing middle class constitutes a major source of demand for the housing market. International investors have been involved in the housing segment for many years, bringing to the market many quality products and being welcomed by customers.

The Hanoi and HCMC office market is also the most attractive segment with the highest yields compared to other office markets in the world, representing 8.65% and 7.86%, respectively. Retail segment is also an attractive investment product because Vietnam has just won the top 10 in retail development index in 2017 by AT Kearney. The resort segment including hotels, hotel apartments and resort villas has also received many opportunities from the strong growth of Vietnam's tourism industry in recent years.

It is clear that in the future, the attractiveness of the real estate market will continue, reflected in the growth of FDI, increasing the number of M & A transactions and increasing the number of new businesses. The efforts of the Vietnamese government to propose, promulgate and apply investment incentive policies as well as to improve the legal framework continue to be a "lever" for Vietnam's real estate market.