In 2015, Vietnam’s economy developed at the fastest pace of any of the last five years, supported by a robust industrial performance, strong exports and high foreign direct investment (FDI), according to real estate agency Savills in its latest Market Research report.
Gross Domestic Product (GDP) grew at 6.7 percent, surpassing the official target of 6.2 percent and the 2014 rate of 6.0 percent. As a result Vietnam now has the highest GDP growth in Southeast Asia – a promising sign for the nation’s booming economy.
Much of this growth has been fuelled by increasing interest from international enterprises with strong foreign investment. Total registered FDI reached US$ 22.76 billion, up 12.5 percent year-on-year (YoY) while FDI disbursement gained 17.4 percent YoY, totalling US$ 14.50 billion.
The domestic real estate market received approximately US$ 2.39 billion in FDI inflow, almost double that of 2014. Amendments to the Housing Law, the establishment of the ASEAN Economic Community (AEC) and new free-trade agreements with the European Union, South Korea and China have made Vietnam’s real estate market an attractive investment environment.
Savills said that the agreement of most importance is the Trans Pacific Partnership (TPP), a free-trade zone encompassing various countries which together account for nearly 40 percent of the world’s economy. According to Vietnam’s Minster of Industry and Trade, the TPP is expected to increase Vietnam’s GDP by US$ 23.5 billion in 2020 and US$ 33.5 billion by 2025.
A major deal this quarter was the acquisition of the South Hoi An integrated casino resort by Chow Tai Fook Enterprises from VinaCapital. This US$ 4 billion project comprises five-star hotels, villas and a casino aimed at the foreign tourist market.
Another significant deal was the auction of the Kim Lien Hotel in Ha Noi. State Capital Investment Corporation auctioned 3.65 million shares of Kim Lien Tourism JSC, equivalent to 52.4 percent of its charter capital. It was sold at a bidding price of US$ 12.19 per share, totaling US$ 44.5 million.
In the residential sector, Genesis Global Capital closed a cooperation agreement with Phuc Khang, a local developer, to invest US$ 300 million. The agreement includes The Diamond Lotus, a US$ 56.25 million condo project in District 8, Ho Chi Minh City (HCMC). CapitaLand, in a joint venture with a Vietnamese company, has committed to invest in a US$ 55 million project in District 2, HCMC. Emaar Properties PJSC, together with local property developer Bitexco, has been granted approval for a US$ 1.37 billion urban area. The development will incorporate infrastructure, housing facilities, hotels and ecological parks and is located in the Binh Thanh District of HCMC. The 427-hectare project will commence in 2016, with the final phase to be completed in2030.
Given the current positive sentiment in Vietnam’s property market, it is expected that 2016 will continue to witness increased transaction activity across all real estate sectors.
