FDI Capital Channelled into Real Estate

The global economic crisis dragged foreign direct investment (FDI) capital for real estate down to only US$1.8 billion in the first eight months of 2009. Compared with US$23.6 billion in 2008 (accounting for 36.8 % of FDI in total in the country), the eight-month figure is very modest. However, the situation was considerably improved in September.

 

According to the Foreign Investment Agency (FIA), as of September 25, FDI capital injected into the real estate market doubled the January-August amount, bringing it to the second position in the FDI attraction list. In September, only one project was licensed with a registered capital of US$1.7 billion. This project is invested by a Taiwanese investor and Phu Thang Long Design and Construction Co., Ltd in Binh Duong province. The capital scale of this project is nearly equal to the combination of all 28 projects licensed from January to August.

 

If the added capital of existing projects is counted, the real estate sector drew US$3.65 billion. Although there were a few projects licensed in September, the accommodation and restaurant group took the lead in FDI scale from other sectors, reaching US$4.57 billion in both fresh and added capital.

 

The industry, processing and manufacturing group slid to the third position with only over US$1 billion.

The Foreign Investment Agency said foreign investors registered to invest US$12.541 billion in the first nine months of 2009, equal to 21.4 % of the amount in the same period of 2008. Particularly, Vietnam acquired 583 newly-licensed projects with total registered capital of US$7.67 billion, which is equal to only 14.3 % of the same period last year. The country had 168 FDI projects register to increase their investment capital by US$4.86 billion in the nine-month period, up 7 % year on year.

 

During the reviewed period, the country's FDI disbursement was estimated at US$7.2 billion, equal to 88.9 % against the same period last year. Vietnam expects at US$10 billion FDI disbursement in 2009.

However, to date, there has been no expertise viewpoint on the real estate price on the back of slumping FDI capital. Notably, property price is also driven by many other factors like demand (both real and unreal) and market price.