A ‘Singaporean phenomenon’ is driving massive FDI into Vietnam now
Looking to the future in Ho Chi Minh City. Image credit: manhhai (Flickr)
Massive amounts of foreign capital continue to spill into Vietnam’s property sector, stemming from more aggressive inflows from Singaporean and other Asian investors than usual.
Real estate accounted for only 5.3 percent of total foreign direct investment (FDI) in the first half of 2016, compared with 8.5 percent over the same period in 2015, data from the Foreign Investment Agency (FIA) shows. However, foreign capital amounting to USD604.8 million, equivalent to 25 newly licenced real estate projects, flowed into the first half of this year, while USD465.4 million was committed last year.
Property ranked second overall among sectors that attracted the most FDI in H1 2016.
Analysts attribute it in part to a “Singaporean phenomenon,” with investors from the city-state leaving local markets due to cooling measures set in place by the government, noted Jeff Foo, chair of the Singaporean Real Estate Brokerage.
Meanwhile, loosened caps on foreign ownership in publicly listed Vietnamese companies have conspired with the government’s credit tightening measures to foment a relatively more auspicious environment for foreign investment. “With a higher risk weightage attached to real estate loans, one way around it is to raise a company’s equity base. The need for capital injections is an opportunity for foreign investments to gain exposure to Vietnam,” Sigrid Zialcita, executive director of Cushman & Wakefield research for Asia-Pacific, said.
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Singaporeans splashed out USD10.9 billion across 81 developments in Vietnam in the first four months of 2016 alone. Singaporean firms invested about US$22.7 million on average in the country.
Singapore-based property titan Keppel Land signed a conditional investment agreement in a joint venture to acquire a 40 percent stake in Empire City in Ho Chi Minh City. In the offing is an 86-storey skyscraper, part of Keppel’s projected USD1.2 billion outlay in the city’s dynamic Thu Thiem area.
Another Singaporean company, SynGience, is ploughing USD18 million into 660 apartments in the DepotMetro Tower project near Tham Luong station.
South Koreans are also deploying huge amounts of capital to Vietnam. Samsung has announced a commitment of USD300 million to a 21-storey building in Hanoi.
Japanese investors, on the other hand, tend to focus on development in the mid-end segment, with railroad operator Tokyu recently announcing a plan to build 9,000 homes in Binh Duong province.
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Source : property-report.com
Read more…Property is the second most attractive sector for Vietnam FDI
