VIETNAM REAL ESTATE CONTINUING AS DESTINATION FOR INT’L INVESTORS

According to the research results of Jones Lang LaSalle Incorporated (JLL), a professional services and investment management company specialising in real estate, although the global economy has not prospered, Southeast Asia still remains a bright spot for investors. Accordingly, ASEAN economic growth remains at 5 per cent per year, which is quite high compared to the global average growth of 3.5 per cent per year. This is creating a huge advantage for developing countries like Vietnam, particularly in the real estate sector.

Attractive commercial property segment

According to the data published by JLL, Vietnam's real estate market has strong potential in the office, residential and retail sectors.

According to JLL, the Vietnam real estate market is very attractive to foreign investors, especially in office segment, residential segment and retail segment. The occupancy of class A office building located in Ho Chi Minh City in the fourth quarter in 2016 exceeded 92 per cent, and for the retail segment, the leasing performance in the central region reached more than 92 per cent compared to the same period. With the housing segment, within 2 years, from 2015 to 2016 the number of new apartments offered for sale increased by 46 per cent.

According to Chris Fossick, JLL Singapore and Southeast Asia Managing Director, the Vietnamese real estate market has been warming up for over one year, backed by reforms of the government with stronger financial regulations for the real estate investors and the policy easing for the foreign investment.

"Vietnam's economy is making major changes, creating higher value and sharply increasing foreign investment flows; the consumer market is also getting bigger to meet the demand of the segments of office, retail and hotel. Notable are the growing office demands in the fields of the financial services, legal services, manufacturing, consumer products and technology sectors," said Chris Fossick.

In 2016, Vietnam recorded the disbursement of foreign direct investment (FDI) of US$15.8 billion. The investment in real estate reached nearly US$1.7 billion by the end of 2016.

Prospects of Southeast Asian real estate

According to JLL, in 2017, real estate market continues to be the destination that obtains huge interest from investors. Besides, Indonesian and Singaporean markets are also considered high potential markets. Indonesia is attracting investments in logistics and predicted to grow strongly. The Indonesia's infrastructure is taking steps to create a springboard for the economic development in the coming years.

"Indonesia possesses many advantages and good potential for economic development, typically the size of population and plentiful demographics. This is a particularly important factor for the development of the logistics industry," said Fossick.

To assess potential for cooperation and the ability to call for investment, as well as promote the development of the economy, according to JLL, requires economic and political stability, and active mechanisms and policies to support investors.

Singapore is seen as a key market with considerable appeal after the adjustment of the capital value. The total domestic product of this country is expected to increase from 1.8 per cent in 2016 to 2.3 per cent in 2017. Singaporean property market will also be evaluated to regain the growth momentum in the next two years, especially the housing segment, which will attract investors better than other cities in the world.

Source: VCCI