View on "Gamuda Gardens" project
Financial capacity and experience join planning and vision in reasons behind foreign investors finding success in Vietnam's real estate market.
While local real estate enterprises are having difficulty selling all of their products, foreign investors have achieved initial success thanks to their financial capacity and experience in running large-scale projects.
An important point in making properties in Vietnam more attractive than developed countries regionally is the high rate of return in the fledgling market, according to Ms. Nguyen Hoai An, Deputy Director of the Research and Consultancy Department at real estate consultants CBRE Vietnam.
Home buyers are now more careful and “smarter” than before, she said. They look for as much information as possible and make comparisons between projects before coming to a decision to buy or not. Consequently, those projects that have been properly invested by prestigious local or foreign enterprises will be preferred.
CBRE believes that the property market in Hanoi and Ho Chi Minh City has more room to develop, even more than Bangkok and Singapore, so foreign investors will invest in the two cities in specific real estate types presenting new opportunities.
Vietnam is also a rapidly developing country with a young population of around 90 million and rapid urbanization and stronger foreign direct investment (FDI) inflows, creating huge demand for real estate.
Rental is one of the most important criteria in evaluating the investment attraction of real estate markets. While it varies between 2 and 3 per cent in Bangkok and Singapore in Vietnam it reaches 7 or even 9 per cent.
A typical example is Gamuda Land Vietnam, belonging to Malaysia’s Gamuda Berhad Group. The company invested hundreds of millions of US dollars in a low-lying and once polluted area of southern Hanoi. The company’s business performance in 2015 proved it made the right decision, with more than 90 per cent of its products being sold.
Together with Gamuda Land, ParkCity, Ciputra, and Posco are other property enterprises that have succeeded in Vietnam thanks to a combination of methodical planning, smooth cash flows and, more importantly, long-term investment vision.