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Real estate attracts foreign funds: Vietnam Real Estate Foreign investors poured nearly US$50 billion into 389 property projects in Viet Nam last year, accounting for more than 23 per cent of total foreign direct investment (FDI), according to the Ministry of Planning and Investment (MoPI).

Singapore topped the list with 55 projects, totalling $8.6 billion. Following were South Korea with 79 projects, worth $6.7 billion. Malaysia, Brunei and Canada were other major investors in the property market.

HCM City ranked first among localities in the country, attracting FDI for 163 real estate projects, worth a total of $12.4 billion.

Other areas that had high foreign investments in the property market were Ha Noi and the provinces of Ba Ria-Vung Tau, Phu Yen, Binh Duong and Dong Nai.

The ministry said that most of the FDI in real estate last year was for luxury hotels, resorts, office buildings and apartments.

According to online site www.cafef.vn, Malaysia's Samling Group's Perdana ParkCity, after buying shares from Vinaconex's Hoang Thanh, became the main investor in the Park City Ha Noi project.

Other investors, such as Berjaya, Daewoo, Capitaland and Indochina Capital, now own many major property projects in Viet Nam.

The website said the Malaysian corporation, Berjaya, often buys a project independently or works with domestic companies in a joint venture to buy projects such as Ha Noi Garden City.

Berjaya owns, among others, a financial centre and an international urban area in HCM City as well as other projects on southern Kien Giang Province's Phu Quoc Island.

Capitaland invested in the Khang Dien Project; Vina Properties, a project in Phan Thiet; and Daewoo, a project in West Lake in Ha Noi.

The ministry said that foreign property investors last year adhered to their investment-license commitments, but licenses were withdrawn from several big projects because of delays in implementation.

For instance, licenses were taken away from a $4 billion project, which was to cover 400ha, in central Quang Nam Province. Vietnam Real Estate Licences were also withdrawn for a 5,600-ha project in central Phu Yen Province, with total capital of $11 billion, and for one in southern Ba Ria-Vung Tau Province.

The ministry said that project delays had been caused by several factors, including regulations related to administrative procedures, taxes and land-use.

Moreover, the investors had been greatly affected by the global recession, and were unable to continue work even though their projects began a few years ago.

The ministry said that, to ensure conformity in the management of property projects, several legal documents must be amended.

The situation of having high levels of registered capital but low capital disbursements was also another important issue that needed to be resolved, according to the ministry.

Getting real about Vietnams real estate Last year was seen as one of the most difficult years for Vietnams real estate market.

However, with many initiatives to address the market waiting in the wings, developers and consultants are still positive for a better year. Bich Ngoc talks with them about challenges and opportunities they may face in 2013. Robert Johnston, national head, commercial agency, Cushman & Wakefield Vietnam.

2012 was a difficult year for Vietnams economy and real estate was no exception. The downward trend experienced in recent years continued to fall across all sectors including residential, office, retail and industrial assets.

C&W anticipates the bottom of the market during the first half of 2013, with a modest recovery during the second quarter of 2013.

In effect, 2013 will be the base year for a slow market recovery. Office supply continues to outstrip demand causing increasing vacancy rates and low levels of take-up due to declining levels of foreign direct investment (FDI).

Therefore, developers must differentiate their product offerings to better serve their buyers or tenants in this challenging environment.

Its important to note that not all sectors of the market are in decline, for example industries such as professional services, pharmaceutical and Fast Moving Consumer Goods are generally increasing in output volumes and headcount growth. This trend has been reflected in transactions completed by Cushman & Wakefield Vietnam during 2012.

Its encouraging to see the monetary initiatives taken by the government in an attempt to stabilise the economy. Inflation is in decline along with the devaluation of the Vietnam dong. These initiatives are imperative for the economy to bounce back from their current economic difficulties.

The outlook remains gloomy in the medium term and only the well capitalised opportunistic investors who are not averse to risk and have a good understanding of market fundamentals will make substantial investments during 2013. Capital values are expected to show steady declines on secondary grade B office or mixed use investment sales. Yields and in turn values on prime grade A will likely show some signs of softening during 2013.

Nguyen Duc Ngoc, director of sales and marketing of The Costa Nha Trang

I personally think that the real estate market in 2013 still contains challenges and opportunities for both demand and supply sides.

Developers who cannot find out capital for implementing their projects will be kicked out of the market. Meanwhile, projects which are on finishing process will be attractive to most customers based on their reality.

This year, I think would be the last chance for customers and speculators to buy products at the lowest price. Meanwhile, foreign developers will increase investment in service and commercial residential accommodation and vacation properties. I expect that the FDI will sharply increase and there will be more and more mammoth M&A cases this year.

The behaviour of the customers has been changed from “wait and see” to “choose and buy”. The price of high-end accommodation is becoming stable and on the trend of increasing for products in finishing process, preferred location, of high quality and clear legal status. Especially products which can be leased or have a more stable return on investment than the banks interest rate will be well consumed by the customers.

Meanwhile, domestic developers are shifting to mid and lower-end accommodation where a real demand exists now. However, due to this shifting in large scale in the next one to three years there will be tougher competition in this sector.

The government has issued many solutions to help the market resume its liquidation in real estate and the whole economy. Bank interest rates are decreasing and becoming more stable then people can have more opportunities to buy accommodation.

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