Evaluation of foreign direct investment – FDI in the real estate sector in Vietnam

Savills said that the level of foreign investors’ interest in real estate projects in Vietnam has changed positively this year.

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Vietnamese real estate attracts foreign investors

Assessing foreign direct investment – FDI in Vietnam’s real estate sector, Mr. Matthew Powell, Director of Savills Hanoi, said that this capital inflow has not properly shown the interest of foreign investors in the real estate sector. 2020. However, this has changed this year.

“Vietnam’s investment environment is now improving compared to many years ago,” said Mr. Matthew Powell, pointing out the advantages Vietnam has.

The first is the large market size, young and dynamic demographics. This is the basic foundation that makes Vietnam so attractive so far.

“The development of Vietnam’s real estate is still based on income growth, demographics and urbanization,” he said. According to the representative of Savills, before Covid-19, Vietnam was in a good position, and even during the epidemic period with many negative impacts on the global market, Vietnam still performed better than many other markets. 

Second, the investment environment in Vietnam is gradually improving. Accordingly, attractive opportunities for foreign investment such as the Government creating opportunities for foreign enterprises to participate in land auctions and legal barriers are being actively removed.

In 2021, a representative of Savills said, 3 areas that attract investors’ attention include residential, industrial and office real estate. In particular, Savills pays special attention to the office segment when the market’s demand is expected to increase sharply in the period of 2020-2021.

“Vietnam is an important target market for multinational companies, especially those in the technology, financial services, life insurance industries… With many projects under construction. , the new supply is likely to make the office segment much more competitive,” explained Savills.

However, foreign investors and real estate developers still face a number of challenges when investing in Vietnam such as infrastructure limitations that cause difficulties in accessing raw materials, transportation, etc. product.

“It is important that the project is located in an area with easy access to key partners and convenient transportation. A clear, well-executed strategy and a solid financial plan are key. necessary for investors”, Mr. Matthew Powell recommended.

According to data from the Ministry of Construction, the total accumulated registered capital in the real estate sector in the first quarter of 2021 was $0.6 billion, up 56% over the same period last year. Vietnam’s real estate sector has always been an attractive field for foreign investors, after the processing and manufacturing industry.

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