Photo: Duc Anh
Limited access to information on planning and the absence of a market database present problems for investors and insiders.
Twenty years since the first condominium project was launched in Vietnam the country's real estate market still lacks transparency, making it less attractive for foreign investors and developers.
The country’s real estate market was ranked 68 among 109 countries and territories in the 2016 Global Real Estate Transparency Index (GRETI) released recently by JLL and LaSalle Investment Management.
Limited access to information on planning and the absence of a market database were the biggest obstacles for investors and insiders in conducting real estate valuations, according to Ms. Nguyen Ha Nhi Duyen, Director of JLL Vietnam’s Valuation Advisory Services.
Databases on the performance of Vietnam’s real estate market released by well-known consulting firms also lack synthesis and unity. Regarding condominiums for sale in Hanoi in the second quarter, for example, VET found that there are gaps between the figures released by two of the most well-known consulting agencies in Vietnam, Savills Vietnam and CBRE Vietnam.
According to Savills Vietnam, there were ten existing and 16 new projects providing 6,700 units in the quarter. “There were approximately 6,000 sales, an increase of 7 per cent quarter-on-quarter and 30 per cent year-on-year,” a Savills Vietnam report noted.
CBRE Vietnam, meanwhile, said that a total of 6,100 new units were launched from 17 projects in the quarter. “A total of 4,860 units were sold during this quarter, increasing by 20 per cent compared to the last quarter but decreasing by 7.2 per cent year-on-year,” its report said.
Local agencies such as the Housing and Real Estate Market Management Agency under the Ministry of Construction and the Vietnam National Real Estate Association (VNREA) also release periodic reports. These reports, however, only offer general indications on total transactions and do not provide any details on performance and sales in each segment.
Vietnam needs to develop an official information channel for real estate investors and homebuyers, who now depend mainly on property brokers or real estate companies in their decision making, according to insiders. “For foreign investors and developers, transparency is regarded as one of the most important factors in them making decision on taking part in any market or not,” one insider said.
Foreign direct investment (FDI) poured in Vietnam’s property market has improved recently. Inflows, however, are still much lower than the heyday of Vietnam’s real estate in 2008, according to VNREA.
In 2008, Vietnam’s real estate attracted $23.6 billion in FDI, accounting for 36.8 per cent in the total. FDI registered in the real estate sector in the first six months of this year reached $604.8 million, or 5.3 per cent of the total, according to figures from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI.