27% of FDI goes to real estate

Real estate became the second-largest sector, after processing and manufacturing,in FDI attraction, in the first half of 2018, with $5.54 billion, or 27.2 per cent of the total, according to a report from the Vietnam News Agency (VNA).

The increasing amount of FDI heading to the property sector expresses greater expectations about the market among investors.



VNA quoted the Foreign Investment Agency at the Ministry of Planning and Investment as reporting that foreign investors poured $20.33 billion into Vietnam between January and June, up 5.7 per cent year-on-year, with real estate being the second-largest recipient.

According to property experts, the growth in FDI reflects the positive signs in the market. About a decade ago, though the FDI to real estate was also considerable it accounted for just 10 per cent of the total.



The greater investment is expected to help standardize the property market and improve its standing, and property supply will become more abundant and diverse in the short term.



Of particular note, the Hanoi People’s Committee granted an investment certificate in the first half to Japan’s Sumitomo Group and its Vietnamese partners to carry out a smart city project worth $4.13 billion in Dong Anh district, and South Korea’s Lotte Group pledged to invest $600 million in a shopping, office and hotel complex in the capital.



VNA quoted Ms. Nguyen Hoai An, Director of CBRE Hanoi Branch, as saying that the growing FDI being poured into real estate proves that investors are particularly interested in Vietnam, which has been much more open to foreigners in recent years. 



The rapid increase in foreign visitors to the country has also helped real estate become more popular. Through initial public offerings and bond auctions, the country has also attracted more attention from international investors.



Ms. An said that global investors began paying attention to Vietnam’s real estate about ten years ago but primarily in casino projects.



They have now switched their focus to housing and consumption property, which has long-term demand, and this is behind the rising FDI.