Vietnam property market becomes attractive for Japanese investors

Alex Finkelstein, a senior specialist on the international real estate market, has assessed that Vietnam real estate had never been a hot market for Asia Pacific Investors. It seems that only few investors from Singapore and South Korea eye properties in some areas of Hanoi and HCM City.

However, the trend is changing recently. Japanese investors start to enter Vietnam realty market. In spite of the global financial crisis, according to Association of Foreign Investors in Real Estate (AFIRE), Vietnam retained its forth position among most attractive newly-emerging markets for foreign investors. A latest research showed that in Vietnam, real estates such as offices, industrial trade areas, resident areas and leisure areas are drawing the attention of Japanese investors.

Before Japanese investors focused on Vietnam properties, they had taken part in the national week in finance, communication, consumption market where they had their own ideas.

Typically, Japan’s Tokyu Corp kicked off work on US$1.2 billion project in Tokyu Binh Duong. The group signed cooperation deals with Vietnamese group Becamex IDC Corp. The joint venture Becamex Tokyu invested 25 trillion dong equaling to US$1.2 billion to develop a 71-hectare project in Binh Duong new city. The project is designed for leisure, commerce, office and 7,500 housing units. Tokyu is the big investor in fields of electricity, railway, urban development, traffic and transportation, hotel and education.

Another Japanese investor is also promoting realty investment in Vietnam, namely Tama Global Investment Pte. The firm last December accessed Vietnam market by acquiring 20% of stocks in Cotec Real Estate Investment and Development Joint Stock Co (COTECLAND), an affiliate of Cotec Group in Vietnam. In the coming time, Tama will transfer advanced technology in construction and property management to the local partner, which aims to shorten construction time, reduce costs, improve product quality and increase profit.

Meanwhile, in the segment of office buildings, a Japanese real estate investment fund bought back Centre Point Building in Nguyen Van Troi St, Phu Nhuan Dist, HCM City. The industrial real estate segment is also starting to be busy. An industrial zone in Dong Nai province will be developed by Donafood Vietnam in joint venture with three Japanese partners including Sojitz Corp, Daiwa House Co Ltd and Kobelco Eco-Solution. All concerned partners will invest US$100 million in 281 hectares of industrial real estate field.

Also, KMIX Corp—a Japanese private firm—purchased 45% of stake in Huy Bao Company to enter the market of building management sector and construction maintenance market.

Most Vietnamese investors assessed real estate market according to downward or upward periods without long term stability. But, Alex Finkelstein said that the assessment did not affect to Japanese investors because they [Japanese] have their own opinion. They think that the increasing population, low labour cost of Vietnam, high appreciation of the yen, stable economic growth, average income per capita and Japanese government’s backup made Vietnam become an attractive market with unlimited growth potential whereby the real estate growth will bring benefits to them. - Source: Vietbiz24