Latest JLL report notes continued activity in Vietnam's real estate market.
Vietnam’s real estate market has maintained its heat over recent months, consultants JLL wrote in their latest report, released on May 12.
With the economy back on track the property market has gathered momentum over the last 18 months, predominantly focused around the residential sectors in major cities such as Ho Chi Minh City and Hanoi.
“Residential sales in each city recorded all-time highs in Quarter 1, 2016, reaching approximately 9,000 units and 8,000 units, respectively,” according to the report.
Grade A office rents in Ho Chi Minh City are increasing due to a lack of supply and increased demand and vacancy rates across all Grades are down to 6 per cent; last achieved in the fourth quarter of 2008.
The retail market remains a mixed bag, with some centers performing well, notably Vivocity, Crescent, Lotte and AEON, with the much-anticipated Saigon Centre Phase 2 coming on line in mid-2016, anchored by Takashimaya.
Many new international brands are looking to enter the market, including Zara and H&M.
The hotel and hospitality sector is also experiencing a resurgence, with many hotels in CBD locations reporting strong occupancy rates and a large number of new operators entering the market, especially in coastal areas such as Da Nang, Nha Trang and Phu Quoc Island, the report notes.
Activity within the industrial sector has improved, with many companies looking to enter Vietnam due to low labor costs and improving infrastructure.
The sector will receive a further boost once a number of trade agreements take effect, including the EU - Vietnam FTA and the TPP. Vietnam stands to be one of the biggest beneficiaries of the TPP over the next five to ten years.
Foreign investors have been circling Vietnam for some time, it went on, with many groups kicking the tires and trying to understand how to gain a foothold in the market. More transactions are now being registered, with Japanese groups leading the way.
The question on everyone’s lips is how long will market conditions last? “In some respects, the real estate market is like the weather. We are currently experiencing a heat wave but we know at some stage the rainy season and cooler conditions will come,” said Mr. Stephen Wyatt, Country Head of JLL Vietnam. “If we look back over the past 26 years Vietnam has witnessed four market cycles - I will leave it to you to do the math!”