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PROPERTY MARKET: BIG ROOM FOR GROWTH
According to the statistics of Vietnam Real Estate Association, in the first ten months of 2015, the number of newly established enterprises in real estate rose
78.7 percent year on year. Side by side with it was the decrease in the number of dissolved firms, about 30 percent, the number of enterprises suspending
operation also declined by 7.2 percent year on year.
According to the General Statistics Office of Vietnam, over the same period, the FDI flow into property reached US$2.14 billion (11.1 percent), ranked third after only processing and manufacturing (attracted US$12.48 billion, accounting for 64.7 percent) and manufacturing and distribution of electricity, gas, hot water, steam and air conditioning (US$2.62 billion, accounting for 13.6 percent).
Looking at these figures, we can deduct that confidence in the property market is recovering at a strong pace. Domestic investors are placing much hope on the breakout of the property market after years of staying quiet, especially now when Vietnam has officially become a member of the Trans-Pacific Partnership Agreement (TPP). Many investors and secondary businesses are expecting the improvement of the market liquidity. Compared with the other channels such as securities, foreign currency or gold, real estate remains a more attractive investment channel. Besides the participation of new enterprises and foreign investors, the fact that the market is attracting more and more attention of buyers is also a positive sign.
Also according to a report of the Research Centre of Bank for Investment and Development of Vietnam (BIDV), in 2015, Vietnam remains one of the world’s biggest remittance receivers. Estimated in 2015, Vietnam will attract about US$13- 14 billion in remittances which mainly concentrate on bank deposits, investment in production and business and property purchase. The recovery of real estate makes many believe that by the end of the year, the market will get even more active when the remittances flow get into Vietnam.
A representative of CBRE believes that the warming up of real estate is a main factor that encourages the increase of remittances into this sector. Also it’s crucial to mention the efforts of the Vietnamese government in the reform of mechanisms and policies to promote financial liberalisation and integration. The 2014 Law on Housing and Real Estate Business that took effect on July 1 2015 has regulations that are considered quite “open” for foreigners and overseas Vietnamese who wish to buy houses in Vietnam is one of the reasons to believe that foreign currency will bloom in this area.
In recent years, the implementation or launch of several major projects bearing signatures of foreign investors have been making highlights on the property market such as the Pride complex in Ha Dong of commerce, service and luxury apartments, the Aeon Mall Him Lam Project including commerce, community service and exhibition, this is the biggest project in Hanoi scale wise and the third biggest in Vietnam of AEON Corporation (Japan) which just went into operation on October 28 in Long Bien district. The project has a total registered investment capital of more than US$200 million, total area of 9.6ha. Besides investing in new projects, foreign investors also make acquisition and merger. Some major projects recently can be mentioned are the acquisition of Indochina Plaza Hanoi by a Hong Kong (China) property investor, a Korean investor also has successfully bought over the Diamond Plaza project. Daibiru Corporation (Japan) showed no hesitance in buying the Corner Stone Building from Vietnam International Bank (VIB).
Real estate experts believe that the year-end will be an important time to assess the market’s demand. Besides the rise of housing demand of people, the amount of remittances pouring in will also reach its’ peak. If real estate market is appealing enough, it will be a good opportunity to improve the liquidity of
the market, also serve as a springboard for the market in 2016. However, experts also say that tools to support the market such as policies and procedures need to be further simplified to help ease foreigners’ reluctance in buying houses in Vietnam, for working and living purposes.
Source: VCCI
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