Foreign funds ravenous for property investment

According to Yamaguchi Masakazu, chief representative of Creed Group in Vietnam, the Vietnamese economy has seen very positive growth and this is a stable foundation for the property market to take off, with especially high demand in the affordable residential and high-end office for lease segments. Last week, Creed and Vietnam’s An Gia Real Estate Development and Investment JSC announced the newest project named Signial – a residential apartment project in District 7 of Ho Chi Minh City.

In 2016, Creed, which has invested over $200 million in Vietnam so far, worked with An Gia to buy two blocks of the Lacasa project to develop the Angia Riverside and Angia Skyline in District 7. The group has also co-operated with Phat Dat Real Estate Development JSC to resume the River City project with 4,000 apartments in Ho Chi Minh City.

“I do believe Vietnam will retain its fast economic growth in the coming years and will become a very good destination for foreign investors,” said Masakazu.

Tran Nhat Khanh, director of VinaCapital Ventures, said that the Vietnamese real estate market has been on the radars of foreign partners for a while now, citing a research by global research firm Brain and Company that there will be around $70 billion invested in Southeast Asia, with 90 per cent expected to flow to Vietnam and Indonesia – the two key destinations for international investors.

“This is a golden opportunity for Vietnam, and domestic developers must improve their capacity to utilise this capital source,” Khanh said. “Vietnamese companies must be more active in co-operating with foreign partners because they hold more advantages than ever, including high market demand, support from the government, and experience in doing business in Vietnam.”

He said that in order to find suitable partners in Vietnam, VinaCapital Ventures usually looks into companies’ products as well as their leaders.

“We highly appreciate innovative products and leaders who have long-term vision, and find it important that they are capable enough to realise their visions,” he said.

The Vietnamese property market posts high demand at the moment, and Masakazu confirmed that the apartment segment remains huge, and there is special interest in projects with good quality and reasonable price.

“Any developer who can meet these two criteria will be able to grow in the future, while developers who cannot keep their commitments in quality and schedule will be eliminated,” he forecast.

Masakazu was also of the opinion that the office for lease segment will see strong demand in the coming time and Creed will also keep an eye on this segment after entering into co-operation with domestic developers to build apartment units.

According to Savills Vietnam, the first quarter of this year has seen active business in the residential segment, while offices continued to be one of the most exciting property sectors across the region.

Matthew Powell, director of Savills Hanoi, said that there is massive interest from foreign investors at the moment.

“At the Savills Hanoi, Danang, and Ho Chi Minh offices, we see many investor groups each day, mostly new entrants who are keen to explore opportunities. This interest is mainly coming from the region – Japan, South Korea, China, Hong Kong, and Singapore – but US, European, and global funds are also investigating heavily,” said Powell.

All the commercial and residential sectors are in the crosshairs. Most of the investor interest comes from funds who are not only looking to develop, but also looking to acquire operating cash-generating assets – office properties, retail malls, four- and five-star hotels.

Looking into the future, Powell expects more deals in 2019 on asset, portfolio, and corporate investment level.

“The large number of initial public offering valuation projects on which Savills Vietnam is working demonstrates investors’ interest in the property market. With the prospects of many real estate sectors in Vietnam, it is expected that investment flows will be directed to a wider variety of sectors, including opportunity assets like industrial and logistics properties,” he added.