Foreign investors cautious about Vietnam’s property market

Foreign investors say Vietnam’s property market remains very potential, but they still show cautious about the outlook due to the economic turmoil.
Statistics show foreign direct investment (FDI) investments in Vietnam’s property market makes out 25 percent of the total amount.

Foreign investors registered to carry out 669 property projects with the total investment of $60 billion in the first half of the year. Most of them are located in Ho Chi Minh City.

VinaCapital says foreign investors are keeping close eye on technical indicators, such as Kearney Index, before pouring into the local real estate market.

Foreign investors still stand on the sideline as Vietnam’s macro economy remains negative.

Phan Huu Thang, vice chairman of the Vietnam Real Estate Association, says many projects worth billions of US dollar have become undone, leaving investment permits being withdrawn.

Among those projects are Bai Bien Rong (Dragon Beach) in the central province of Quang Nam, with the registered investment of $4.15 billion, and Ho Tram Asian Coast in the coastal province of Ba Ria – Vung Tau.

VinaCapital says that foreign investors still hesitate to enter the local market as they remain cautious about inflation, the government’s credit growth cap of 20 percent, high lending rate of 22-25 percent per annum, a strong dollar and the state-owned firms’ low business efficiency.

The investors will become much more eager only if these factors are improved, the investment fund says.

Statistics show the FDI flow worldwide is getting dramatically weaker this year.

Yet international investors are favoring emerging markets, such as India, Indonesia, Vietnam and Thailand.

Vietnam ranks second among the most attractive investment destinations in Asia after China and 12th among the world’s top 20 favorite place of FDI investors.

Figures from the investment fund VinaCapital indicate that more than 10,000 FDI-led investment projects worth US$170 billion were registered in Vietnam in the period between 2000 and 2010.

This year’s amount is expected to fall around 30 percent to $13 billion, with about $11 billion being disbursed.

Taiwan is the biggest FDI investor, followed by Korea, Singapore, Japan and Malaysia.

Analysts say, despite a large foreign investment flow in the last 10 years, the disbursement rate remains low, amounting to an average of around 58 percent. The flow this year mainly comes from Singapore, Hong Kong and Malaysia.

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market