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|Foreigners buy properties in Ho Chi Minh City both for investment and living|
Nguyen Thanh Phong, Chairman of the Ho Chi Minh City People’s Committee, revealed that the city currently has 7,372 active foreign invested projects, with total registered capital reaching $45 billion. In 2017 alone, the city authorities licensed 803 new projects worth $2.34 billion and 194 projects with $962.63 million of additional capital. At the same time, the value of merger and acquisition (M&A) transactions reached $3.68 billion.
Among sectors that attracted foreign direct investment (FDI) capital last year, real estate topped the list with $1.01 billion, or 43.4 per cent of the total. Among these are major projects such as the $886-million Eco-Smart City in Thu Thiem New Urban Area, the $215-million KNT Asia project or the $80-million project by Tech Mastery Vietnam. In July 2017, the market also recorded the $350-million Mizuki Park project, developed by Nam Long Group in collaboration with Nishi Nippon Railroad and Hankyu Realty from Japan. The project spans over 26 hectares in Binh Chanh District, Ho Chi Minh City.
At the same time, SonKim Land raised $100 million from Japanese investors to develop its real estate projects in Ho Chi Minh City. Singapore-based Keppel Land also poured new capital into its projects in districts 2 and 7.
Most recently, Japan’s Mitsubishi has entered a collaboration with Phuc Khang Construction and Investment Corporation to set up a joint venture called Phuc Khang Mitsubishi Corporation Holding (PKMC) for green projects in the city. Mitsubishi and Phuc Khang contributed 49 and 51 per cent of the stakes, respectively. The joint venture will develop Diamond Lotus Riverside, Vietnam’s first project to be built and managed following the LEED (Leadership in Energy and Environmental Design) standards, which are common in 150 countries around the world.
In January, PKMC disbursed the first investment of $30 million in the Diamond Lotus Riverside project in District 8. In the coming time, PKMC will research the development of Phuc Khang’s current 20-ha land bank, with total investment capital of $500 million. The land plots owned by Phuc Khang are scattered across districts 1, 2, 8, 10, Tan Binh, and Tan Phu, ideal for apartment complexes and shopping malls. The developer also has another 1,000ha of land in neighbouring cities and provinces.
According to Su Ngoc Anh, director of the Ho Chi Minh City Department of Planning and Investment, FDI inflows into real estate will increase in 2018. There are several factors for this boom, said the official.
The city authorities have continued to launch progressive laws to attract foreign investors, especially in terms of reducing red tape and facilitating investment. For example, the city authorities have just introduced online registration services for M&A transactions conducted by foreign investors. They also launched the second phase of their online registration system for new businesses.
The real estate market is also showing signs of improved transparency. Nowadays, interested investors can easily access information on market movements, legal updates, and any necessary procedures for investment.
Experts believe that these new rules, together with the growing market demand, will encourage foreign capital to find its way to the property sector in Ho Chi Minh City. The city currently has about 500 projects waiting for new capital.
Moreover, Ho Chi Minh City also has various landmark projects such as Thu Thiem New Urban Area, which is now in the project development phase, and the third phase of the Phu My Hung township. There are other smart city projects which can lure foreign capital.
Troy Griffiths, deputy managing director at Savills Vietnam, believes that overseas investors will be enticed by Vietnam’s rapid urbanisation, young population, and steady economic growth. Ho Chi Minh City’s economy, as an important part of Vietnam, also welcomes a growing urban middle-class and the city itself is at the forefront of globalisation, making real estate a very attractive sector.