Vietnam’s real estate market still attracts foreign investment.

FDI in real estate climbed by 1.85 billion USD in 2022, or 70% more than the amount in 2021, according to the Foreign Investment Agency (MPI).

Real estate position

This industry accounted for more than $4.45 billion, or 16.1% of all foreign investment inflows into Vietnam in a single year. Large residential projects and industrial property received the majority of the capital.

Some significant players, like Gamuda Land, have a 5.6 ha commercial and residential project called Uni Galaxy on Ngan Ha Street in Binh Duong. The overall transfer value of the project is close to 1,285 billion VND. Additionally, CapitaLand (Singapore) and Becamex worked together to invest more than $500 million in a smart city project in Binh Dung.

Additionally, Keppel Land inked a contract with Phu Long Real Estate Joint Stock Company to purchase 49% of the shares in 3 land plots in Hoai Duc (Hanoi) for a total of 119 million USD. A housing project with 1,020 high-rise flats and 240 low-rise apartments was what this business intended to build. However, Keppel Land has also disclosed the sale of a 30-hectare residential project in Ho Chi Minh City.

Foreign loans also saw large transactions during this time. A loan of 100 million USD (2,350 billion VND) from the Singapore investment fund Credit Opportunities III Pte. Limited was disclosed by Novaland (HOSE: NVL) in early August 2022. Besides, Novaland receives USD 250 million from a group of investment funds led by Warburg Pincus (US).

Meanwhile, a plan to borrow 10 million USD from The Shanghai Commercial & Saving Bank, Ltd.'s offshore banking branch and another 10 million USD credit loan from its Dong Nai branch was made public by An Gia Group (AGG) at the end of November 2022. In addition, An Gia intends to borrow 18 million USD from Hatra PTE Limited - a plan approved by the company's Board of Directors in November.

Special resources for the market

Experts claim that Vietnam has seen success as a result of 30 years of adopting open economic policies to draw FDI. Vietnam has attracted investment from more than 140 nations and territories, with the manufacturing and real estate industries drawing the most attention. According to the General Statistics Office, FDI in Vietnam in the past year was nearly 22.4 billion USD, the highest in the last 5 years.

This is seen as one of the key resources for encouraging economic expansion, particularly given the current liquidity crisis.

According to Mr. Neil MacGregor, Managing Director of Savills Vietnam, Vietnam has remained attractive to foreign investors despite the instability of the global economy. The security and political stability, the affordable cost of labor, and the welcoming investment policies are some of the main attractions of Vietnam. The Vietnamese market has seen the presence of some recent well-known foreign investors, such as Apple and LEGO.

"It is feasible to seek funding for the real estate sector through FDI inflows due to the wide range of investors' interest in the Vietnamese market", said Mr. Neil MacGregor.

Realized capital for real estate investments has reportedly started to rise dramatically in recent years, according to Cushman & Wakefield. It frequently remained low in the past while the registered capital remained large.

"There are three main sources of capital in Vietnam, including equity capital; fund management companies, and financial investors. Now, Vietnam is considered an investment opportunity market, not an investment market with stable cash flow," said Ms. Trang Bui - General Director of Cushman & Wakefield.

The prospect of FDI in 2023 remains promising as the government continues to work on law and regulation changes and amendments. Besides, the reform of administrative procedures is underway nationwide. The moves will help to reassure investors and provide a necessary impetus for new foreign players to enter the Vietnamese market.