An investment wave from Asia is moving into the real estate market of Hanoi. Investors are now paying attention to buying licensed projects and finished construction works instead of leasing land and starting construction. This is the conclusion of the CB Richard Ellis (CBRE) in Vietnam for the Vietnam’s year-end heating real estate market.
Mr Marc Townsend, Managing Director of CBRE, said many factors attract investors into Vietnam, especially in Hanoi and Ho Chi Minh City. These two markets are very developed, populous and urbanised. Apart from Hanoi and HCM City, foreign property consultants and managers also see huge potentiality from other markets such as Danang, Nha Trang, Haiphong, Phan Thiet and Mui Ne.
In general, the real estate market is heating up by the Land Law, which took effect in July 2006, and Real Estate Trading Law, which became effective in January 2007. Moreover, the Decree 84, effective from May 2007, allowed foreign investors to lease lands in 70 consecutive years instead of only 50 years as before. “This decree helps Vietnam become one of the most opening real estate markets in Asia,” said Marc Townsend.
Factors to increase the demand for properties include the economic growth rate, the FDI capital increase and the presence of multinational groups after Vietnam joined the WTO. Furthermore, many Vietnamese companies have expanded operations and needed high-grade offices.
According to CBRE’s forecasts, the office rentals in Hanoi and Ho Chi Minh City will increase due to the over-demand in 2008. The rentals of Grade A offices will increase to US$45-46 per square metre at the end of 2008.
The competitiveness and the transparency of real estate markets hinder investors to seek and implement investment projects and buyers to directly purchase houses. The price of real estate is too high for the income level o Vietnamese people and the economic growth. The housing speculation and unreal demand stimulation to push up the land and house prices negatively affect investment and management activities and the sustained development of the market. Currently, the main difficulty encountering new investors, especially foreigners, is to find a good location at a reasonable price in Vietnam. Besides, investors take much time and effort to complete investment procedures and site clearance.
Box: According to Mr Trinh Huy Thuc, Chairman of Vietnam Real Estate and Housing Association, Vietnam now has 729 urban zones, including two special urban zones, three first-grade zones and 14 second-grade zones. The urbanisation is forecast to be at high rate in the coming years. The urbanisation is estimated to be 30 per cent in 2010 and 50 per cent in 2020. The demand for real estate, especially houses, in Vietnam will be very high. In the 2007-2010 period, Vietnam needs to build 366 million square metres of houses, including 176 million square metres in urban areas and 190 million square metres in rural areas. The demand for offices and shops will be also very high.
Thi Van- Trung Kien
Vietnamese
