1. Vietnam’s property market recovers
Laborers work at the construction site of an apartment building in Hanoi on July 1, 2015. Photo credit: Kham/Reuters
The Vietnamese real estate market has recovered after a four-year-long freeze, with construction on new projects starting in big cities and sales volumes rising significantly.
Home sales in Hanoi jumped 80 percent in the first 11 months of this year to 17,750 units compared with a year earlier, and Ho Chi Minh City’s sales rose 90 percent to 17,050 units, according to government data.
Improving economic conditions and lower lending rates have spurred the sales, analysts say.
Prices of Ho Chi Minh City apartments have increased 12 percent in the third quarter from a year ago, and Hanoi has risen 3 percent, according to Jones Lang LaSalle Vietnam.
The third quarter also saw a revival of some long-delayed projects, which new developers have taken over and revitalized by providing more finance or redesigning unit layout, size or mix, CBRE Vietnam said in a report.
"What matters is that we need to control the market so it will not become overheated, resulting in a bubble," Minister of Construction Trinh Dinh Dung said in a TV interview in July.
2. The opening up of foreign housing ownership
A sale agent (L) introduces foreign potential buyers to an apartment building project in Ho Chi Minh City's District 4 on July 26, 2015. Photo credit: Tuoi Tre
The amendments to the Law on Housing relaxing the rules on foreign ownership of property, which took effect July 1, has aroused plenty of interest among foreigners.
The changes allow foreigners with valid visas and international organizations operating in Vietnam to buy up to 30 percent of an apartment building or 250 houses in a ward -- a subdistrict-level administrative area -- that can contain thousands of properties.
The old law restricted ownership to foreigners married to Vietnamese and those foreigners deemed to have made significant contributions to the nation’s development. Even then, however, they could only buy apartments, not landed property.
Many foreigners have welcomed the new law. More than 400 transactions from foreign buyers have reportedly been posted since July.
This is encouraging considering only 126 foreigners bought between 2009 and 2013.
But many potential buyers say they are awaiting more guidance in implementation.
Analysts say the government should make clarifications on sending money into and out of Vietnam.
They also urge the central bank to instruct foreign-owned banks operating in Vietnam on how to lend to foreign home buyers.
3. Thuan Kieu Plaza’s failure
Thuan Kieu Plaza in Ho Chi Minh City's District 5 has sat almost empty since it was inaugurated in 1998. Photo: Diep Duc Minh
Despite being located in a prime area in District 5, Thuan Kieu Plaza, Ho Chi Minh City’s first luxury apartment building, has sat almost empty since it was inaugurated in 1998.
The joint venture between Hong Kong-owned Kings Harmony International Limited and Saigon Real Estate Corporation, which developed the plaza at a cost of US$55 million, recently sold it to An Dong Investment Corp. at VND600 billion ($26.5 million).
Architect Luu Trong Hai, who was a consultant for the project, said the developers’ expectations were wrong.
He said the plaza was designed in a Hong Kong style, utilizing very small apartments with ceilings of only about 2.7 meters tall. The developers were anticipating an influx of Hong Kong immigrants when the territory was handed over to China in 1997.
But in the end no one came, Hai said.
Only a few local residents bought the expensive apartments, while most who could afford them did not buy because they were turned off by the design, he said.
Hai also said when the project began, many experts had advised the investors to revise the design, making them bigger so they would be appropriate for Vietnam's climate, but they had rejected the suggestion.
An Dong, the new owner, said it would revamp the plaza to “better meet demand of the local community.”
4. Vietnam’s tallest new building
A rendering of the Vinhomes Central Park. Photo credit: Vingroup
In July, real estate conglomerate Vingroup introduced the 81-story Landmark tower project in Ho Chi Minh City’s Binh Thanh District, which would surpass Hanoi’s Keangnam tower as the country’s tallest upon its completion slated by the end of 2017.
Work on Landmark 81, as it is known, began in December 2014. The skyscraper will consist of a five-star, 260-room hotel, a shopping mall, 250 apartments and other facilities.
The tower is part of the US$1.5 billion Vinhomes Central Park project, which also features dozens of apartment buildings and a park modeled after New York City's Central Park.
5. Southeast Asian expansion
The Hoang Anh Gia Lai Myanmar Center in Yangon, Myanmar. Photo credit: HAGL
Hoang Anh Gia Lai (HAGL) Group, the first Vietnamese property developer to expand operations overseas, put into use the first phase of its US$440 million HAGL Myanmar Center project in Yangon in June.
The first phase features a shopping center, two office blocks and a five-star hotel.
The group’s chairman Doan Nguyen Duc said he has saved part of the project for Vietnamese investors to open their business in Yangon.
Demand of industrial and office space in most ASEAN markets is expected to increase in the coming years as the formation of the ASEAN Economic Community could encourage more multi-national companies to enter the region and more regional small and medium enterprises to expand their business, analysts say.
This offers investment opportunities for property developers, including Vietnamese ones, they say.
6. HCMC metro system could be a game changer
Construction of Ho Chi Minh City's first metro line between Ben Thanh Market in District 1 and Suoi Tien Theme Park in District 9 is ongoing. Photo: Diep Duc Minh
The metro lines in Ho Chi Minh City, which are now under construction, are expected to bring noticeable changes to areas around the transit stations, which include a surge in land prices and a real estate development boom.
The city has plans for six metro lines. Construction of the first one between District 1’s Ben Thanh Market and District 9’s Suoi Tien Theme Park started in December 2013. Work on the second linking District 12’s An Suong and District 2’s Thu Thiem new urban area rolled out early this year.
Both are expected to have trains running from 2020.
“With the first metro line in Ho Chi Minh City making good construction progress and set to open in 2020, all of us who live and work in the city are gearing up for some big and exciting changes,” Marc Townsend, managing director of CBRE Vietnam, said, “For those of us in real estate, the game will be changing even more dramatically.”
A CBRE report said that the number of apartment buildings increased in areas close to the planned stations in the last three years.
7. HCMC is the second most expensive retail location in Southeast Asia
A corner of Dong Khoi Street in downtown Ho Chi Minh City. Photo: Pham Huu
A global research report from Cushman & Wakefield has named downtown Ho Chi Minh City as one of the most expensive retail locations worldwide in 2015.
The southern metropolis, which is the largest commercial center in Vietnam, ranks 32 out of 65 cities featured in the US-based property consultancy’s “Main Streets Across the World” report.
Locations on a “prime high street” in the city, such as Le Loi, Nguyen Hue or Dong Khoi, cost an average of US$1,594 per square meter a year. In Southeast Asia, the next highest rate is Singapore’s at $3,567.
That compares to $1,329 in Bangkok, $1,179 in Kuala Lumpur and $598 in Metro Manila.
It is even higher than the rent in Israel’s Tel Aviv ($1,408), whose GDP per capita in 2014 was $42,614 and more than eight times that of Ho Chi Minh City.
8. FDI in real estate rises sharply
A man works at a construction site of a foreign-invested project in Ho Chi Minh City on August 27, 2015. Photo credit: Kham/Reuters
New foreign direct investment (FDI) pledges in real estate in the January-November period rose 83 percent from a year ago to US$2.32 billion.
That figure made real estate the third most attractive sector after manufacturing and energy.
The new FDI commitments in real estate accounted for 11.5 percent of the total $20.22 billion attracted by the country in the first 11 months.
Former Deputy Minister Dang Hung Vo of National Resources and Environment, the office responsible for land management in the country, told local media that he expects the sector to make up 30 to 40 percent of the total FDI pledges in 2016.
9. SOEs go slow on divestment
In November, Deputy Prime Minister Vu Van Ninh ordered state agencies and enterprises to continue to pull-out from non-core businesses, including real estate.
Ninh said, though, they do not need to make divestment at any cost, they need to “immediately” tackle cases where they suffer losses.
Since 2010, state agencies and enterprises have sold a total of VND16.45 trillion (US$719.75 million) worth of non-core businesses, according to the government's latest figures.
Nearly 53 percent of this, or more than VND8.7 trillion ($380.83 million) worth, was from the real estate, insurance, securities, and finance and banking sectors.
But it is only 37 percent of the target the government had hoped to achieve by this year end in the five sectors it deems “risky.”