Vietnam Market Watch: Real Estate Opportunities, Mobile Subscriptions, and Trade with Cuba
Real Estate Sector to See Strong Growth Long Term
Analysts believe that Vietnam’s real estate market is expected to see strong growth in the next 15 years; Vietnam, along with Indonesia and Philippines are expected to lead growth in the ASEAN region to 5.2 percent in the Asia Pacific real estate market – the highest globally, this year. However, experts have urged the Vietnamese government to improve Human Resources and infrastructure and attract foreign developers to avoid a bubble. Foreign investors have shown interest as they seek to cut costs in China and Singapore. In the office space sector, Ho Chi Minh City and Hanoi have much less office space compared to other countries, and the government must do more to ensure that more office complexes are built; office investment is set to double by the year 2020.
In addition, the hospitality industry would need more than 120,000 rooms by 2030 to meet tourist demand. In the retail sector another 4.3 million square meters will be required by 2030. Land prices have increased by 30-40 percent recently while apartment prices have been relatively stable. Housing demand is mostly driven by locals. Only 5 percent of homeowners are foreigners. Analysts also stated that while the country’s infrastructure has improved, it would need to work hard to develop the sector once free trade agreements (FTAs) come into effect. In line with the growth of the real estate market, foreign investors can take advantage of this growth, particularly in Ho Chi Minh City and Hanoi where office space is expected to grow.
High Expectations for Mobile Internet
Smartphone mobile internet subscriptions are expected to triple by 2021 from 30 million in 2015 according to study by Ericsson’s Mobility and South East Asia and Oceania. The study stated that Vietnam along with Myanmar, Indonesia, Bangladesh and Philippines will see highest mobile internet subscriptions by 2021. The study also revealed that in Vietnam, 30 percent of smartphone users use social networking, instant messaging and video applications every day. In addition 4G/LTE network is expected to be launched in the country soon, enabling more mobile data services to grow.
The Information and Communications ministry is also encouraging foreign investors to invest in building telecommunication infrastructure and information technology – particularly R&D centres in Hanoi, Ho Chi Minh City and Da Nang. Statistics by Google reveal that online shopping through smartphones is significantly increasing; 70 percent of Internet users search for information about a product on their phones before making a purchase. The Vietnam Chamber of Commerce and Industry (VCCI) stated that small and medium enterprises account for around 97 percent of the business community and yet such business have a low rate of using smartphone technology. With the growth of smartphones, foreign investors should look at ways to engage the Vietnamese consumer market are likely to reap benefits for their business.
Vietnam, Cuba Seek Greater Investment
The Vietnamese government has pledged to make it easier to allow Cuban investors to invest and operate in the country. The development comes after visit by the Cuban delegation in Hanoi. Deputy Prime Minister Trinh Dinh Dung stated that favorable investment conditions would particularly be created in the transport and construction sector and vice versa. The government is also seeking quick collaboration between Vietnamese constructions firms with companies in Cuba as well as exports to the country. Cuban officials are positive and hope to reduce imports of construction materials through the collaboration with Vietnamese companies. Officials also hoped to collaborate on HR training in construction.
Vietnam’s is Cuba’s second biggest trading partner in Asia with bilateral trade more than US $207 billion in 2014. Major products exported to Cuba include rice, coal, chemicals, textiles and computers, while Cuba has exported pharmaceuticals worth US $1.3 billion to Vietnam. Vietnamese officials are also seeking investment from various avenues including private and foreign investors, built-operate-transfer (BOT) and public-private partnerships (PPP). Vietnam and Cuba are expected to sign a memorandum on the collaboration which will include programs in biotechnology, biopharmaceutical industry, nano-science and non-technology among others.
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