Scarcity of 'clean' land restricts foreign investors to pour capital into real estate market

Exciting real estate M&A deals

The real estate market is expected to continue to be active in 2017 with a series of mergers and acquisitions (M&A) deals. The real estate market of Vietnam strongly attracts foreign investors mainly with M&A activities. Joint ventures are becoming more common among foreign investors.

JLL claimed that hundreds of millions of dollars are waiting to be poured into the domestic market in most segments, including housing, offices, retail, hotels and industrial parks.

This source of money comes from investors of different countries such as Japan, Korea, Singapore and the incredible growth of investor groups from China such as CFLC, Country Garden, Jiayuan, ...

Japanese investors are steadily increasing their presence in Vietnam. Many other Chinese developers are also interested in real estate projects in Vietnam.

The "taste" has changed

Usually, the residential segment is the most attractive. Besides, investors are now driving their attention to the commercial real estate market, mainly focusing on Grade A office projects at convenient locations, which promise substantial potential growth.

According to JLL, office rents in Vietnam are much higher than other countries in the region, which indicates shortages in supply. Investors also show particular interest in hotel projects.

Numerous challenges

For housing and commercial projects, foreign investors often look for "clean" land. The term of “clean” means the completion of the relevant procedures (such as compensation and land clearance, payment of land use levy, land use rights). However, such “clean” land plots are rare, as the real estate market in Vietnam is still young.

Besides, Vietnam’s real estate market is still strictly controlled, which limits the potential development of projects and the access of investors to promising projects. Therefore, most foreign investors often seek the support of professional consultants before entering the market.

Vietnam's real estate market is receiving a lot of attention from foreign investors. This trend is expected to continue in the future.

Foreign investors always favour profit-generating projects, which are still scarce in Vietnam. Local companies and foreign investors are strengthening their cooperation, and we hope to receive more positive signs coming.

The real estate segments are still growing as expected. The hotel segment has always attracted attention with a significant amount of foreign capital poured into Vietnam.

It is forecast that this trend will continue while other markets like industrial parks and education are also steadily growing. The affordable housing market is seen as an attraction of investment capital, mainly due to the rise of the middle class.

Vietnam is still firmly drawing attention from investors in the region, and M&A activities in Vietnam will break a new record in 2017 and 2018.