Vietnam’s Real Estate Market Shows Signs of Recovery
HCMC – After a three year down-turn, Vietnam’s real estate market may finally be showing signs of recovery following recent stock market gains, three consecutive interest rate cuts and renewed government interest in helping the market recover.
Neil McGregor, managing director of real estate provider Savills, believes that Vietnam is now an attractive alternative given that many Asian markets are at the peak of their cycles and will begin to cool in the coming years. “We believe that Vietnam remains a key destination for real estate investment in the Southeast Asian region,” McGregor stated at the recent Vietnam-Singapore Business Forum in Ho Chi Minh City (HCMC).
Growth has also been spurred by investments in satellite cities that service Vietnam’s major metropolitan areas. Nam Long Investment Corp., Vietnam’s largest affordable housing developer, is planning to increase its market capitalization tenfold by creating suburban style communities in Long An province – the gateway to the growing Mekong Delta. To help facilitate construction of these new projects, Nam Long has received a $US7.5 million International Finance Corporation loan.
Additionally, recent government actions have further stimulated the recovery. Previously, many investors placed their funds into gold and equities. Recently, however, these types of investments have had tighter regulations imposed upon them; this has prompted investors to shift their funds into property development. Le Xuan Nghia, vice Chairman of the National Financial Supervisory Commission, is confident that the property market will continue its recovery, due in part to government efforts to support businesses through tax reductions and the abolition of fines on overdue loans.
After the recent struggles in the Vietnamese property market, the government’s response has been cautiously optimistic. According to Vu Van Phan, Deputy Director of the Housing and Real Estate Management Department, while the situation has become more positive, further efforts are required to deal with the inherent instability in the market.
These sentiments have been echoed by Tran Nhu Trung, Deputy General Director of Tan Hoang Minh Group, who believes that liquidity increases from two to three percent indicate progress in the market. However, Tran Nhu Trung also warned that “at this time, we must recognise the market is in a deep adjustment period after the previous hastily prepared development.”
Savills has revealed that several successful transactions were concluded in the first quarter of 2014. Lotte Mart, a major Korean retailor, expanded its operations in Vietnam by acquiring Pico Plaza in HCMC. On the domestic front, local developer Novaland Group announced plans to invest VND3.7 trillion (US$176.2 million) into three new residential projects in the city.
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