Photo: Duc Anh
Sector accounts for 7.3% of total FDI in first seven months and follows only processing and manufacturing.
New and additional foreign-direct investment (FDI) into real estate this year had reached $956.8 million by July 20, or 7.3 per cent of the total, according to the latest report from the Foreign Investment Agency (FIA) at the Ministry of Planning and Investment.
It ranked second in terms of FDI attraction, following processing and manufacturing, which had $9.12 billion in new and additional capital and accounted for 70.5 per cent of all FDI. Total FDI into the country in the first seven months reached $12.94 billion, an increase of 46.9 per cent year-on-year.
Thirty new projects were registered in the first seven months in real estate and five existing projects added capital.
Japan’s Mitsubishi Corporation and the Bitexco Group recently established a joint venture in which Mitsubishi will hold 45 per cent and Bitexco 55 per cent, with total investment estimated at 30 billion Japanese Yen ($290 million), to develop The Manor Central Park, a large-scale mixed-use development in Hanoi’s Hoang Mai district.
There was also a notable trend of foreign investors taking part in Vietnam’s real estate market via major M&A deals during the second quarter. According to a JLL report released on July 29, deal volumes remained considerable in the quarter, with foreign investors taking up the majority on the buy side and Ho Chi Minh City remaining the most desirable destination. “The quarter’s investment deals were diversified, with a good variety of asset and property types transacted and investors from many countries,” report noted.
Notable transactions in the second quarter included the G Homes land plot in District 2 (a residential development site), the Tran Hung Dao land plot in District 1 (a commercial development site), and Kumho Asiana Plaza in District 1 (a mixed-use property, including office, retail, hotel and serviced apartments). The buyers were all foreign investors. “The investment market is likely to remain active in the coming quarters, thanks to the large growth momentum in Vietnam in recent quarters amid lower activity in the region,” JLL wrote.
According to insiders, FDI in real estate over the remaining months of the year may increase further as the market is seeing a positive impact from the new Law on Housing and Law on Real Estate Business, which came into effect on July 1 last year and loosened restrictions on the purchase of real estate by foreigners.
Foreign developers are also keen to take part in the residential sector, as Vietnam is considered to have steady economic growth, an expanding middle class, and higher demand for housing.