American news agency analyzes the "heat" of Vietnam real estate

Many international businesses are pouring capital into Vietnam. This is also the time when the commercial real estate market is "benefiting" and becoming more prominent compared to other countries in the region.

Take advantage of opportunities to develop

Bloomberg News recently published an analysis of the opportunities and potential of the Vietnamese real estate market. According to the author, a few years ago, the Asian commercial real estate market was mainly driven by China and Hong Kong. With the booming development of the mainland economy , office buildings had impressive occupancy rates.

Industrial real estate is one of the segments benefiting from FDI capital flows. Photo: Dung Minh

However, the tide has turned. The economy of the billion-people country is facing deflationary pressure and the real estate market is in a "non-stop" decline. This is the reason why investors are gradually shifting their attention to other potential markets in Asia, including India, South Korea and Vietnam.

In 2023, registered foreign direct investment (FDI) in Vietnam increased by more than 32% compared to the previous year. Meanwhile, global FDI increased by only 3%. This shows that Vietnam still maintains its special attractiveness in the face of international instability.

“Supplier partners of Apple, Intel and Samsung already have manufacturing facilities in Vietnam. Meta has recently said it will consider expanding its investment in the country,” said Christine Li, Asia- Pacific research director at Knight Frank. She also emphasized that real estate rental prices in Vietnam have increased sharply as many large businesses seek more opportunities outside the mainland.

Bloomberg cited data showing that real estate rental prices in major Chinese cities could fall by up to 6% this year. Meanwhile, in Ho Chi Minh City, this figure in the first quarter of 2024 increased by 6.6% compared to the same period last year.

This contrast is partly a result of the “China Plus One” strategy, a business strategy that encourages investors to diversify their supply chains and reduce their dependence on one country.

“As long as tensions between China and the US continue to escalate, the ‘China + 1’ strategy will continue to be extended,” said Goodwin Gaw, Chairman of real estate investment firm Gaw Capital Partners. This Hong Kong company also owns a number of real estate projects in Ho Chi Minh City.

Fierce competition in Asia

However, Vietnam is not the only country benefiting from the “China + 1” strategy. Bloomberg asserts that India is gradually eliminating China’s dominance in the manufacturing sector. Last year, the value of Indian electronics exports to the US tripled compared to two years earlier.

As the “eagles” actively fly to India, the demand for space, especially research and development centers, has also increased. Mr. Henry Chin, head of research for the Asia- Pacific region at CBRE, affirmed that most multinational companies that need to expand their operations choose India as their destination.

Not only does Vietnam have to compete with its big rival from South Asia, it also has to compete with other developing countries. On international real estate forums, many investors are gradually becoming more sympathetic to Cambodia’s real estate market.

“Foreigners can permanently own a house in Cambodia, as long as the house is on the second floor or higher. Meanwhile, Vietnam stipulates that the maximum ownership period for foreigners is 50 years. After that period, the buyer will have to renew. This makes many people hesitate to buy a house in Vietnam,” a foreign investor shared.

People also said that real estate prices in Cambodia are more affordable. The average price of a house in Phnom Penh is only about 1,000 USD/m2. In Ho Chi Minh City, the price can be up to more than 3,000 USD/m2.

In addition, many foreign investors have expressed concerns about the risk of Vietnam falling into the middle-income trap. If Vietnam fails to accelerate its growth in the next decade, foreign businesses may look to countries with more room for growth, such as Cambodia, to seek better profit opportunities.

Source: https://baodautu.vn/batdongsan/hang-thong-tan-my-phan-tich-suc-nong-cua-bat-dong-san-viet-nam-d214773.html