Investors from Europe, US absent from Vietnam real estate market
Asian real estate developers have increased their presence in Vietnam, while European and American investors have remained indifferent to the market.
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Many M&A deals were made in Vietnam in 2017. Phu Long JSC acquired Posco’s 50% stake in An Khanh New Urban Area Development joint venture, which is the developer of Splendora urban area.
VinaLand Ltd, managed by VinaCapital (Singapore), sold all its stake in Vina Square to Tri Duc. Hongkong Land signed an agreement to develop Thu Thiem River Park with HCMC Infrastructure Investment (CII).
The common characteristic of nearly all the deals was the presence of investors from Asia. Creed Group from Japan has taken over Lacasa project initially invested by Van Hung Phat Real Estate.
Hankyu Realty and Nishi Nippon have joined forces to develop Mizuki Park urban area project together with Nam Long Company. Meanwhile, Dai Phuoc Lotus project has been transferred by VinaCapital to China Fortune Land.
According to the Foreign Investment Agency, the real estate sector ranked third among the business fields with largest FDI investment capital in 2017 with US$3.05 billion worth of capital committed, accounting for 8.5% of total FDI capital.
Real estate was also the field which attracted the most FDI in HCMC in 2017, according to the city People’s Committee, with US$1.01 billion worth of capital registered, or 43.4% of total FDI. Japan was reported as the biggest investor in the city, followed by the Republic of Korea.
Vietnam in recent years has continuously seen a sharp increase in investments from Asian investors, including Japan, the ROK, Singapore, Hong Kong and mainland China. Meanwhile, the presence of investors from Europe and the US remains negligible.
Explaining this, Su Ngoc Khuong from Savills Vietnam blamed it on cultural differences, which lead to market differences. He said that real estate, by nature, has close relations with local rules, and legal issues could be why western investors are less interested. Savills Vietnam CEO Neil MacGregor believes that western investors who remain inexperienced need more time to learn about the market.
He said he doesn’t think Vietnam is insignificant in their eyes. Western investors act as financial investors of listed real estate firms. An analyst affirmed that the number of companies from Europe and US investing in real estate securities through investment funds is not lower than the number of companies from Asia.
The analyst said that European and American firms tend to focus on real estate related services. The companies that manage office buildings, resorts, hotels, serviced apartments and shopping malls are all well-known brands from Europe and the US.
