HIGHLIGHTS IN REAL ESTATE INVESTMENT IN VIETNAM

Vietnam is attracting interest of investors in both domestic and foreign market. Overall, investor confidence was returning to the Vietnam real estate market. Both buyers and sellers have enhanced activity in recent months.

The real estate market of Vietnam has overcome the recession period within 4 or 5 years ago but in the last 12 months, the market has recovered and noted positive signs as well as confidence in the market in general.

Law on housing and real estate business Law takes effect in July 2015 and has acted quickly and positively on the real estate market in Vietnam. The changes in the Law on housing have significantly eased the regulations on home ownership for foreigners, although there are still some limitations.

 “Hot spots” of FDI inflows

According to a recent report of Jones Lang LaSalle Vietnam (JLL), a series of free trade agreements such as TPP, EU and ASEAN will further promote the medium and long term development. Interest rates and inflation rate have declined significantly and became more stable in the past two years, helping the investment activity to occur more positive in both Ho Chi Minh City and Hanoi. With some domestic and foreign investors such as CapitaLand and Keppel Land, they have spurred the construction activities thanks to the growing revenue in the last 12 months.

Accordingly, the amount of disbursed FDI in the period from January to September of 2015 rose by 8.4% compared to the same period last year, reaching 9.7 billion USD. This is the strongest growth since the late 1980s, contrary to the slowdown of the Chinese economy. The amount of registered capital of new investors also rose even more sharply with 11 billion USD, focused primarily on the manufacturing industry, in which the energy and electronics industries are the sectors with the highest registered capital investment in the year, followed by the real estate sector.

According to the Ministry of Planning and Investment, FDI investment in the industrial park in Vietnam accounted for 67% of total FDI in Vietnam with 11 billion USD and accounting for 59% of the total 1,400 projects in the first 9 months of 2015. A notable transaction is the event that Amata Corporation acquired the land worth 279 million USD in Long Thanh (Dong Nai) for the purpose of building residential and industrial areas valued of 500 million USD.

According to JLL, the residential real estate prices in Vietnam maintained an average rate with 2 bedroom apartments, 70 m2, 10 – 15 minutes to reach the central area of Ho Chi Minh City, which are sold at the price of 1,600 – 2,000 USD/m2, equivalent to 112,000 – 140,000 USD/apartment. When compared with the big cities in the region, the price is believed to increase significantly.

Who dominated the real estate market of Vietnam?

JLL’s report showed that domestic investors are boosting investment activity in the real estate market of Vietnam. The largest real estate investors in Vietnam are Vingroup and Novaland Group.

Vingroup is Vietnam’s largest real estate development and management with market capitalization of about 3.4 billion USD. Vingroup’s investment portfolio includes 45 real estate projects spread across many sectors of the real estate market, including Vinhomes luxury apartments and villas; Vincom Center and Vincom Mega Mall; Vincom Office; 5 star Vinpearl resort; Vinpearl Luxury resort….

Novaland Group has participated in the real estate market in 2007 with the first project is Sunrise City with investment capital of 500 million USD located on Nguyen Huu Tho road, district 7. The real estatebusiness of Novaland focused on the apartment complex segment from mid to high classes and the segment of house land with 25 projects that are being implemented throughout the downtown districts.

Vietnam is becoming an attractive place for foreign investment in the medium term than many other countries in Southeast Asia. Data from Real Capital Analytics (RCA) recorded that there are more attention from a number of private investment funds that are allocated foreign capital into Vietnam in an attempt to increase their market presence in Vietnam.

In the 2^nd quarter of 2015, a joint venture of Warburg Pincus – a US investment fund, has invested 100 million USD into Vincom Retail, the Vietnam’s largest trade center ownership and management in Vietnam. Also in this quarter, Gaw Capital Partners has received the transfer of 4 real estate projects under various segments from Indochina Land with a total value of 106 million USD. Gamuda Land has also receive the transfer of 40% shares (equivalent to 64.1 million USD) in the Celadon City project, a modern urban area with initial investment by a joint venture between Sacomreal, Thanh Thanh Cong (TTC) and An Phu Gia.

The current real estate profit margin is high

JLL’s analysis shows that investors are now enjoying 6 – 7% profitability rate for residential real estate and 9 – 11% for commercial real estate, depending on location, completion time, quality of the project and the signing time of the tenants.

According to General Director of JLL Vietnam, real estate investment in emerging markets has always been seen as risky investments but with higher potential profits. Investors are willing to engage in joint venture projects in these markets, where they will combine with local investors who wish to have capital supporting – in order to have a foothold in the market before and also experience the exponential growth in the future when the economy of these market growing fast.

Moreover, the emerging markets such as Vietnam will have the potential growth factors, including population growth and high urbanization rate. Investors and project developers can take advantage of these factors.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Market Entry
• Tax Advice
• Legal Advice
• Outsourcing Services

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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JAPANESE GIANT PETROLEUM CORPORATION ENTER VIETNAM MARKET

There is a trend that foreign corporations entering Vietnam market as they see the potentials of this rising economy.

Japan’s Idemitsu Kosan Group has received an investment license to open a joint venture with a unit of Kuwait to build a petrol distribution system in Vietnam.

This corporation will contribute 50% capital to Idemitsu Petroleum Q8 Co., Ltd, along with Kuwait Petroleum International (KPI) to set up station system to retail gasoline in Vietnam.

The investment registration license has been granted by the Vietnam Government and the business registration procedures are being conducted. If completed, this would be the first time when Vietnam petroleum distribution market has the participation of an enterprise with 100% foreign capital.

Currently, the two partners in the joint venture of Idemitsu Petroleum Q8 are all shareholders in Nghi Son Petrochemical Complex and Vietnam Oil and Gas Corporation (each party hold 35% of the capital).

Nghi Son Petrochemical is expected to trial operating in 2016 and commercial operating in 2017. Thus, through the establishment of a separate company on the distribution of petroleum products, Idemitsu and KPI will complete the production and distribution chain in Vietnam, ensuring the supply as well as output for the product.

Apart from the investment in joint venture distribution and petrochemical company, Idemitsu Kosan is also engaged in a series of beginning stage projects of the petroleum industry, such as investment in the mining lots (Lot 09-3, Lot 05.1). Moreover, this Japanese giant also said that they are ready to consider contributing funds when PV Oil carries out equitisation.

Idemitsu Kosan is one of the leading oil and gas group in Japan, with history of over 75 years of formation and development. The group’s market capitalization has now reached 108.6 billion Yen (almost 1 billion USD) with net sales in 2014 reached 4,630 billion Yen (about 42 billion USD). By the end of the first quarter of 2015, the corporation has nearly 9,000 employees.

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Discover a Small Paris through 5 Architectural Works of Hanoi

Albeit being such a small city, Hanoi’s architecture is a mixture of both domestic and foreign influence. Hanoi contains in it the ancient style of feudal past, modern 21st century to Soviet-inspired monotone blocks, and that ofeternally-valuable French design.

In the process that shapes up Hanoi as of today, a number of the city’s buildings clearly show the distinctive imprint of French architecture. The influence is obvious in the organization of space, technical and construction materials and patterns of expression. The unique French architecture that adjusts for the local oriental style of living has become a characteristic of thousand-year-old Hanoi.

Of the finest French buildings in town, these five works are among the most popular that can not be missed whenvisiting Hanoi.

Hanoi Opera House

Hanoi Grand Opera House, a smaller version of the Opéra Garnier in Paris, was built on 07/06/1901 and completed in 1911. The Opera House was constructed in theater-style which draws its influence from the classical works in Renaissance Europe.

The building occupies an area of 2600 square meter, at its peak reaching 34 meters above the adjacent road and the main auditorium measures 24 by 24 meter. Hanoi Opera House is a unique work with an outstanding value of history, culture, architecture and art.

Nowadays, this is one of the most important hearts of Hanoi where regular cultural activities, art performances, concerts, etc. are often held.

Hotel Sofitel Metropole Legend Hanoi

Situated in the heart of Hanoi, sandwiched between Hoan Kiem Lake and the magnificent Opera House, the hotel was funded in 1901 by two French investors. Sofitel Metropole Hanoi bears that feeling of the colonial period with its white-painted walls, green windows, delicate iron patterns, wooden plank walls and a green lawn.

This is the very first five-star hotel in Hanoi where many ambassadors and celebrities have chosen to stay. Besides, Sofitel Metropole is the only hotel in the entire Indochina region with a unique collection of Citroen classic cars.

The President Palace

The President Palace, built in 1901 and completed in 1906, at first played a role as the palace for the Indochina’s General Governor Palace.

Like many French colonial architecture of this time, it is wholeheartedly European in design, with the only hint of a Vietnamese presence is the mango garden that surrounds the building. The palace’s ground is designed symmetrically, with a big block in the middle and two blocks on either sides. The building is covered in yellow paint and the huge green iron gate still guards its entrance.

At present, it is the office of the President of the Socialist Republic of Vietnam.

Dong Xuan Market

Constructed by a French company called Poinsard Veyret in 1980, Dong Xuan Market is one of the biggest markets in Hanoi as well as the largest market in the Old Quarter area.

The design of the market is relatively simple: its 6500 square meter area contains five blocks with domes of 52 meter length each and steel frame of 19 meter high. The front entrance owes its stunning look to French architecture, including five sculpted triangular arches arranged like a honeycomb and metal roofing.

After the liberation of the capital, Dong Xuan Market remains its full usefulness and civil architecture to Hanoians and now is one of the most important clue markets of Hanoi.

Saint Joseph Cathedral

The church was built in 1886 following the Gothic architectural style of medieval Europe which was popular in the 12th century and the Renaissance.

Saint Joseph Cathedral much resembled the Notre Dame Cathedral Paris with curved domes toward the sky. The church has a length of 64.5 meter, width of 20.5 meter and two 31.5 meter high tower with massive stone pillars at the four corners. On the top of the church lies the huge stone cross. The church also owns a collection of western-made bells including four small and one very large bell which itself costs 20,000 francs to build at that time. It also has a giant clock which the alarm system linked to the five bells hanging on the two towers.

To this day, Saint Joseph Cathedral still holds several masses throughout the day and is usually crowded on weekends and religious holidays.

French architecture in Hanoi has become a heritage which both represents historic significance and combines harmonically with the traditional architectural elements of the urban landscape. It has played an important role in conceiving the beautiful image of Hanoi and creating an unforgettable impression on those who visit the thousand-year-old Ascending Dragon.

Further information   

Risk Prevention in Vietnam

 Trade promotion in Vietnam

Fraud Management in Vietnam

Due diligence corporate investigations

Vietnam entry strategy

Vietnam market intelligence

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FOREIGN EXPERTS FELT “BREATHE EASY” WHEN LIVING IN VIETNAM

Vietnam ranked 21^st in the economic ranking, but ranked 5^th when talking about the saving ability of foreign experts.

According to the survey from HSBC. Most of foreign experts believe that Vietnam had a more comfortable life with less spending on housing costs (62%), travel (73%), clothing (68%), goods and necessities (62%), essential services like electricity, water, telephone (70%) and bills (77%).

Thus, experts are likely to save more (68%) while living in Vietnam.

More than half of the foreign experts (62%) said that in Vietnam they can afford to hire a maid and nanny, something that they cannot afford while living at home country, and can enjoy the luxury vacation (52%), compared with only 28% and 36% of global experts.

The survey from HSBC also showed that Vietnam ranked 22^nd in the ranking on experience, but 2^nd in the ability to make friends. More than half of the foreign experts (56%) find that they integrate quickly into life and culture of Vietnam, and the majority of foreign experts find it easy to make new friends in Vietnam (68%).

Stabilize the life in Vietnam is relatively easy, with 36% of the experts feel like home once or within six months after moving to Vietnam. Most of foreign experts also enjoy integrated into in Vietnam (61%), enjoy and cook Vietnamese foods (78%).

Vietnam ranked 31^st in the ranking about family. Almost half of the foreign experts (43%) said that the cost of child care in Vietnam is less expensive than at home country, and most of foreign experts (74%) send their children to the international School.

Vietnam is developing very fast and owns a dynamic business environment. This is an attractive destination for entrepreneurs seeking start-up opportunity and new business projects.

As an emerging market, Vietnam brings foreign experts many challenges and chances to develop career. With significant attractions in terms of tourism, culture and people, Vietnam also brings foreign experts wonderful experiences along with ease of integration and stabilizes the life in Vietnam.

Further information   

Risk Prevention in Vietnam

 Trade promotion in Vietnam

Fraud Management in Vietnam

Due diligence corporate investigations

Vietnam entry strategy

Vietnam market intelligence

Read More