Japan is the second biggest investors in 112 countries having projects in Vietnam
Until now Japan has had 3,200 projects in Vietnam with total registered capital of $42b.(Source: Foreign Investment Division)
Investors from the land of cherry blossoms, who are classified as the most conservative and cautious investors worldwide, are taking strong steps into Vietnamese real estate market.
DESIRE FOR A SYMBOLIC PROJECT
Back to 1990s, despite of huge investment into processing, manufacturing or mechanics, Japanese investors seemed to be cautious in real estate field. At that time the only Japanese-invested project in Vietnam was the brand Nikko with two 4-star hotels in Hanoi and Ho Chi Minh City.
When the Vietnamese real estate market recovers. Japanese investors start coming back for investment.
Among investors seeking opportunities in Vietnamese real estate market, Japan ranked no.1 with 22%, followed by Singapore 17%, South of Korea 14% and USA 8%. This shows the attraction of the Vietnamese real estate market. In 2015 – 2016, there are a number of big property groups from Japan paying interest in local market with activities like partnering, M&As.
FAVORING HIGH-END PROJECTS
Keisuke Koshijima, Director of overseas business development of Kajima, said that Vietnam is one of the focal market for luxury projects of Kajima.
“The Vietnamese real estate market has big potential for high-class segment and we consistently pursuit this segment in Vietnam in the years to come”.
One of the notable investors of Japan, Tokyu Company established a joint venture with Becamex IDC to build and develop the Binh Duong Tokyo Garden Urban Zone Project in the new city Binh Duong, 30 km from HCMC. With the total investment of $1.2b and 110 ha area, this zone, when completed will have approximately 7,500 apartment, commercial, services & office zones.
Hidekazu Nagashima, Chariman of The Global Group said that this group took great interest in the Vietnamese real estate market since 2008-2009.
“The Vietnamese market has great potential and definite similarity to Japan years ago. In 03 recent years, we have conducted deep market research in HCMC real estate market and terms and conditions of partnership with land companies in Vietnam, especially in medium and luxury segmentation”.
Not only emphasizing high-end projects, Japanese investors also commits to deep investment in developing mid-end and affordable housing projects, meeting the biggest housing demands in Vietnam for now. In 2014, Creed Group woke up the whole market with the deal investing into a series of projects in HCMC such as City Gate Towers, Angia Skyline and River City.
Apartments in these projects have been on sales with affordable prices (from 1 billion VND per unit) for Vietnam buyers.
STARTING TO EYE MID-END AND AFFORDABLE SEGMENTS
Toshihiko Muneyoshi, Chairman of Creed Group believed that Vietnamese economy with deeper and deeper integration will attract more global investors.
“HCMC is a dynamic city with population of 12 million but housing stocks are still limited. That’s a big but unexploited market. Besides, allowing foreigners to buy house in Vietnam is a breakthrough to boost growth of the housing market”.
“The taste” of these investors is to hunt opportunities to develop housing projects with good locations linking to downtown or in-operation assets which can bring stable cash flow. However, the expert also said that most of foreign investors didn’t jump into quick decisions but spent resources to make through market research before action.
According CBRE, approximately 6% of newly-registered and additional FDI capital are into real estate. Foreign investors have had positive responses to the market.
There are two reason for the strong wave of foreign investment into Vietnamese real estate market:
- The attraction to the foreign investors was due to the basic KPIs of the market, which are high urbanization level, young population, gradual increase in expected income, stable economy growth, the rising of middle class, etc.
- Besides, the Government’s attempt to improve transparency index in the property industry played an essential role in attracting foreign investors.
According to the GRETI report in 2016 by Jones Lang LaSalle, Vietnam’s rank is rather low in term of the property market’s transparency level, standing 68/109 nations. However, compared with years ago, Vietnam image has been improved gradually. Currently, foreign investors can easily approach information of the market and legal frameworks. Domestic project developers has strong advance in applying technologies. These factors contribute greatly to the transparency of the real estate market in Vietnam.