Foreign Property Investors to Pounce in Vietnam
16 August 2011
Foreign property investors are expected to benefit from the tightening of monetary policies in Vietnam, not least because of the disadvantage they put local companies at.
Efforts by the State Bank of Vietnam and the Government to curb inflation have tightened developers' access to credit, which has led to reducing supply of projects.
Nguyen Van Duc, deputy general director of property firm Dat Lanh, said buying and selling was mostly conducted through banks, and that with locals now facing difficulties raising finance they are at a disadvantage, leaving the way open for foreigners to swoop in and pick up large chunks of Vietnam's distressed real estate.
Duc went onto explain how the market's biggest problem is the lack of affordability, with locals unable to afford to buy apartments costing upwards of $96k without taking out a mortgage. Thus, because of the tightening of bank lending a large proportion of mid-high end flats cannot be sold, he said.
Neil MacGregor, deputy director of Savills Viet Nam, said increasing inflation, economic instability and high lending rates would result in a spurt in M&As in the real estate market this year.
Le Hoang Chau, chairman of the HCM City Real Estate Association, said M&As would enable local firms to weather tough economic times.
William Young, MIPIM ASIA's senior project director, said at a recent press briefing in Ha Noi that Viet Nam was an ideal destination for real estate investment this year.
He predicted that in the next two to five years, Viet Nam's real estate market would become increasingly attractive due to growing liquidity.
Within the short term, investors would chiefly plump for apartments, trade centres and hotels, Young added.