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Growth quality concerns over disproportionate investment in Saigon real estate

Real estate attracted the highest proportion of capital by far into Saigon Jan-Apr, raising sustainability concerns.

A recent report on the socio-economic situation of Ho Chi Minh City in the first 4 months of 2019 says real estate accounted for 32.7 percent of all domestic investment into the city, the highest proportion, followed by the sale and maintenance of motor vehicles, at 17 percent.

Investments in processing and manufacturing were so negligible that they did not merit mention in the list.

Real estate also made up the lion’s share of foreign investment registered for the city in the four months, at 46.8 percent, while the tally for the processing and manufacturing sector was only 6.7 percent.

Nguyen Thanh Phong, Chairman of HCM City People’s Committee, has expressed concern that capital was being overwhelmingly directed at real estate instead of production, threatening the quality and sustainability of growth.

“In order to promote sustainable growth, resources should be focused on developing processing and manufacturing. Even at the recent HCMC Investment Conference, there was no talk on manufacturing projects, it was all about real estate, and real estate …” he observed.

Phong said the city’s processing and manufacturing industry still has a lot of potential. For instance, the food industry is still in its infancy, while the city is geographically connected to major agricultural regions like southeastern Vietnam and the Mekong Delta.

He has assigned the municipal Department of Planning and Investment to coordinate with the Department of Industry and Trade to actively seek investors for these sectors.

“We can’t sit and wait for them to invest in the right areas,” Phong said.

HCMC recorded nearly VND271 trillion ($11.61 billion) in total domestic investment in the first four months of 2019, down 3.9 percent over the same period last year.

Of this, VND211.7 trillion ($9.07 billion) were capital registered for 13,094 newly incorporated enterprises, and VND59.3 trillion ($2.54 billion) was capital supplements in existing ones.

Source: vnexpress

May 13, 2019 / by / in
FDI in Vietnam real estate sets new record

Foreign direct investment (FDI) flows in Vietnam in Jan-Apr 2019 sets a record for the value of registered investment capital over the same period in the past 4 years, according to a report from the Foreign Investment Agency under the Ministry of Planning and Investment. 

Specifically, in the first months of the year, total FDI reached $14.59 billion, up 81 percent compared to the same period last year. Some $5.7 billion of FDI have been disbursed, an increase of 7.5 percent year-on-year.

Processing and manufacturing sector still ranks first among the 19 sectors attracting FDI. According to the report, FDI inflows into this sector in Jan-Apr reached nearly $10.5 billion, accounting for around 72 percent of the total registered capital.

FDI in Vietnam real estate

Real estate ranks second with $1.1 billion, making up 7.5% of the total, an increase of more than 36 percent over the same period of 2018. This is considered a record level. Since 2016, real estate has continuously maintained the second position in the list of FDI attraction industries with the increase of total investment capital.

Notably, Hong Kong surpassed Japan and South Korea to take the leading position on the list of countries and territories pouring FDI into Vietnam. Accordingly, after 4 months, FDI from Hong Kong into Vietnam hit $4.7 billion, accounting for 32.5 percent of total investment capital. The next one is Korea with a total investment of $1.98 billion, making up 13.6 percent, followed by Singapore with $1.87 billion, or 12.8 percent.

With a total registered FDI of more than $4.47 billion in 4 months, accounting for 30.6 percent of the total, Hanoi remains its leading position in attracting FDI, followed by Ho Chi Minh City with $2.37 billion, or 16.3 percent, and Binh Duong with over $1 billion, making up 7 percent.

(Source: Thanh nien)

April 30, 2019 / by / in
A guide for foreigners buying property in Vietnam

The amended 2014 Housing Law, which took effect from July 1, 2015, allows foreign individuals and organizations to own property in Vietnam. The more “open” regulations of the Law have created new demand and momentum for the local real estate market. Here are the latest updates on Vietnam property foreign ownership that you need to know. 

How can foreigners buy property in Vietnam?

Foreign individuals are eligible to buy residential properties in Vietnam, as long as they can enter the country legally. All legal entities like foreign investment funds, banks, Vietnamese branches and representative offices of overseas companies that are established in Vietnam; are also eligible to buy Vietnam properties. The Housing Law allows eligible foreign entity and individuals to buy and own all residential sectors including apartments and landed properties such as villas and townhouses (previously only applicable to apartments). However, foreigners can not buy more than 30% of the total units within one condominium complex; not exceeding 10% for the total number of the separate houses for each project or 250 separate houses in a ward-level administrative unit.

A guide for foreigners buying homes in Vietnam

Several major past restrictions on property ownership have been removed for foreign buyers

Tenure of ownership:

– Foreign individuals: up to 50 years leasehold from the date of issuance of ownership certificate with possible renewal (subjected to approval by authorities.)

– Foreign individuals with Vietnamese spouse: Freehold

– Foreign organizations: up to the duration (inclusive of extended duration) indicated in the investment certificate.

Purpose of purchase: 

Properties owned by foreigners can be sold, sub-leased, inherited and collateralize (previously only for the owner’s residence purpose).

In addition, experts from real estate consulting firm Savills advise foreigners should open bank account in Vietnam when they need to make payment to housing developers. They recommend international banks with branches in Vietnam such as ANZ, Citibank, HSBC and Standard Chartered.

Taxes involved in Vietnam property foreign ownership

Value added tax (VAT): 10% VAT is taxed on any sale of property by local or foreigners.

Administration fee: A minimal administration fee is to be granted an ownership certificate at the current regulation.

Registration tax for ownership: 0.5% registration tax for obtaining the house ownership certificate on the apartment value.

Maintenance fee: This is a shared fund contributed by buyers for maintenance of shared parts of the housing project. Currently, the maintenance fee is 2% on the pre-tax sale price.

Personal income tax (for resale): If personal income is earned through the assignment or resale of apartments or houses, a 2% personal income tax has to be paid on the transacted value.

Personal income tax (for rental income): If personal income is earned through rental of house/apartment, 5% VAT and 5% PIT has to be paid on revenue.

For rental income exceeding VND 100,000,000 per year, a business license tax of VND 1,000,000 per year applies.

(Source: Enternews)

 

April 30, 2019 / by / in
HoREA offers proposals to help real estate firms access long-term bank loans

The HCM Real Estate Association (HoREA) has suggested the State Bank of Vietnam (SBV) extend the application of regulations on banks’ maximum ratio of short-term funds used for medium- and long-term loans until the end of 2020.

Image result for real estate in ho chi minh city

The HoREA also proposed the rate should be reduced to 37 per cent starting from January 1, 2021; 34 per cent from July 1, 2021; and 30 per cent from July 1, 2022.

The moves were announced after the SBV released a draft circular stipulating that the maximum ratio of short-term funds used for medium- and long-term loans at banks would be reduced from the current 45 per cent to 40 per cent from 2019 to June 30, 2020.

Under the SBV’s draft circular, the rates of 37 per cent and 30 per cent will be applied from July 1, 2020 and July 1, 2021, respectively.

According to the HoREA, the amendments will damage the real estate market as property enterprises are in dire need of medium- and long-term loans. It explained that due to the large proportion of short-term capital in banks’ total mobilised capital, banks will find it difficult to meet the demands of the real estate market.

The HoREA said real estate firms in developed countries have raised capital from investment funds and stock markets. Bank loans are mainly provided to homebuyers. However, in Vietnam, property companies are dependent on bank loans and capital mobilised in advance from homebuyers, while most homebuyers also take loans from banks.

The local stock market has yet to become a major channel of capital access for real estate enterprises as the number of listed property firms is small. Only some 65 out of more than 1,000 real estate firms are listed on the stock market, the HoREA said.

Real estate investment funds and the stock market are unable to meet the high demand for capital in the property sector. Vietnam currently has only one investment fund for the sector, Techcom Vietnam Real Estate Investment Trust, an arm of Vietnam Technological and Commercial Joint Stock Bank, with charter capital of only VND50 billion (US$2.14 million).

The foreign direct investment (FDI) inflow to the local real estate market is also limited and does not meet capital demands, though it accounts for some 21 per cent of the country’s total FDI value, the HoREA said.

It expects the application of the amended Law on Securities this year to create favourable conditions for the establishment of real estate investment funds and trusts to provide capital for the local market.

According to the Law on Real Estate Business, investors in property projects must provide at least 15 per cent of the equity or 20 per cent of the investment capital. The remaining 80-85 per cent of capital can be mobilised from banks or customers.

Source: VNA

April 30, 2019 / by / in
Vietnamese photographer captures stunning aerial photos of Saigon

A Ho Chi Minh City-based photographer has released a collection of photos capturing the iconic locations and landmarks of the southern metropolis from an aerial or bird’s eye view.

Nguyen Tan Tuan, with a great love for Saigon and passion for aerial photography, has been inspired to ‘give birth’ to beautiful photos of the dynamic city.

The photographer named the album “Saigon Skyline,” referring to the former name of Ho Chi Minh City, as he either snapped his shutter from atop the high-rise buildings in the city or shot the photos by a drone camera, or flycam.

“Photographers always have to choose between Ho Chi Minh City’s many unique high-rise buildings and architectural works, carefully studying the subject and selecting appropriate angles so that the photos are beautiful and new,” Tuan shared his experience of taking aerial photos.

Photo by Nguyen Tan Tuan/ source: tuoitrenews

 

November 20, 2018 / by / in
An austere house near Saigon recalls villages in northern Vietnam

Having pure cement floors and brick walls without cement paste, a house recalls the brick houses style of the ancient Vietnam’s village.

Located in Binh Chanh District, Ho Chi Minh City, a three-story house designed by architect Tran Hoang Trung and his colleagues at TD Solutions was finished on September 2018.

The area is divided into two parts for the garden and the house, whose cylinder shape is quite common among urban houses. However, the living space is quite airy with the a lot of trees.

The house was constructed based on the steel frame of an old house. Demolishing the whole building except for the frame, the designers create a brand new house.

The stairs are the highlight of the house. The side entrance leads to the garden, inviting more air and enhancing the connection between inner and outer space.

Materials from the old house including bricks, wooden floor and wooden doors are utilized for the new house’s construction to promote its simplicity.

The house becomes more authentic and connected to nature with pure cement floors or brick walls without cement paste.

There is many furniture made from natural and traditional materials, such as rush carpets, bamboo curtains, and cane lamps.

The study room in the third floor has a wooden bookshelf.

While the bedroom looks modern with windows, bed, curtain, it remains traditional with wooden furnitures and brick walls.

Next to the main house, the kitchen is built like a little corner in the garden, creating a warm and cozy atmosphere for family meals.

Source: e.vnexpress.net

 

November 16, 2018 / by / in
Famous US Co-working Space Will Set Up in Ho Chi Minh City

WeWork, the third largest startup in the U.S., and the sixth largest in the world, is set to open a new office in Ho Chi Minh City late this year. In its latest report on the co-working space market in Vietnam, real estate firm Jones Lang LaSalle (JLL) said WeWork is looking to open an office on Doan Van Bo Street in District 4.

office for lease in ho chi minh, coworking space ho chi minh, wework coworking space

The company recently did market research and customer surveys. The office, to open in December, will be the largest co-working space in Vietnam at 5,000 square meters. It was said the entry of global real estate startups is a positive sign.

WeWork, valued at $20 billion last year, was one of the largest startups in the U.S., behind only Uber and Airbnb, and the sixth largest in the world. Founded in 2010 it has 250,000 employees. It had acquired Chinese co-working space firm Naked Hub for $400 million last April, expanding its reach into the Asian market.

WeWork reported a rise in losses in the first half of this year to $723 million from $154 million a year earlier, according to Reuters. But JLL estimates it would continue to expand.

It said in its report: “We think Wework is likely to have a presence in most of the six Southeast Asia cities within the next 12 months. In addition, the company is likely to grow in terms of number of locations within each city as well.”

Vietnam has seen the co-working space market expand in recent years. Major local operators like Toong, UP, Circo and Dreamplex are all expanding at an accelerated rate, and the number of smaller operators with just one venue is also increasing. The Hive, a co-working space maker from Hong Kong, is planning to open a new facility by the end of this year in Ho Chi Minh City. The company already has one office on Xuan Thuy road in District 2 in the same city.

Real estate consultancy CBRE said the number of co-working offices in the country has grown by an average of 55 percent in the last five years. Most operators reported a very healthy 75-80 percent average occupancy rate as of last April.

Source: Vnexperess

September 20, 2018 / by / in
Lost the map for planning of Thu Thiem New Urban Area

A map for the planning of Ho Chi Minh City‘s Thu Thiem new urban area, which has been considered the most important part of the city’s modern development, has gone missing, officials told reporters on Wednesday.

“We have not been able to find the map,” said Nguyen Thanh Nha, director of the city’s Department of Planning and Architecture. He said that the city’s government agencies have been ordered to review all previous sources and consulting units in charge of the project, as well as the central government agencies.

The map is one of the two key documents that form the legal basis for the planning of the Thu Thiem new urban area project to the city’s east, besides a prime minister’s decision issued on June 4, 1996. Since 1995, many units which were originally in charge of the map have moved. They said they no longer have it in their possession.

key map of Thu Thiem New Urban Area, Thu Thiem New Urban Area, Thu Thiem District 2

Vo Van Hoan, chief of staff of the city’s People’s Committee, said that agencies are looking for the map, dismissing claims that it did not exist in the first place. The project had been approved with adequate papers. The Thu Thiem new urban area in District 2 spans 657 hectares (1,623-acre) across the Saigon River from the city’s central District 1. It is set to become one of the biggest international financial and commercial centers in Southeast Asia.

To develop this megaproject, the city had to spend 10 years moving 15,000 households out of Thu Thiem Peninsula to make room for the project, and had to pay affected households nearly VND30 trillion ($1.32 billion) in compensation. Many relocated households however have had disputes with the project’s operators regarding its defined boundaries and filed lawsuits against its developer.

At a meeting with the city’s chairman Nguyen Thanh Phong in 2016, representatives of the households with disputes claimed that their land did not lie inside the project’s area and therefore shouldn’t have been reclaimed. They also requested the city to show them a map of the project’s planning to clarify its boundaries, but the authorities were unable to fulfill this request at the time.

Source: Vnexpress

May 3, 2018 / by / in
How will the property market of HCMC be in 2018?

The property market will continue to grow this year, the HCM City Real Estate Association (HoREA) predicts. In a forecast it has sent to the Government, HoREA said one- and two-bedroom apartments price at below 1 billion VND (43,800 USD) would be the best-selling segment and have the highest liquidity.

“The social housing segment will further develop while there will be a restructure of the high-end segment to meet market demand,” it said. “Condotels and land plots in housing projects will continue to be in great demand. Disputes over apartment buildings will be more knotty and need to be resolved in a timely manner.” Le Hoang Chau, chairman of HoREA, said the city real estate market would expand this year to neighboring regions. Investors, both domestic and foreign, would strengthen co-operation, he said. The market will develop more steadily with online trading becoming more popular and more green constructions that are environment-friendly becoming trendy.

property market of HCMC, property market news

The association said there would be a raft of mergers and acquisitions this year, boosting construction activities in the city. Foreign direct investment would remain the main source of funding for the market. There is no threat of a bubble this year thanks to timely action by the Government. Furthermore, developers too have made efforts to tweak their investment so that they develop products that match the actual demand in the market. Buyers are becoming smarter and understand the market clearly.

In a report it released two days ago, global property consultant CBRE said, “In 2018 the mid-level segment will continue to account for the biggest proportion of the market, while the high-end and luxury segments will observe more considerate new supply, helping the market develop more sustainably.

The east and south will continue to be the hotspots of the market, with more new launches in districts 2, 7, 8, Binh Thanh such as One Verandah, GEM Riverside, Midtown, High Intela, Green Field. The average selling price in 2018 is expected to increase by 3 percent, with high-end and luxury segment showing an increase of 5 percent, and the mid-level and affordable segments increasing at a lower rate of 1.5 percent. The association said in 2017 the real estate market grew at over 4 percent. The medium and low-end segments saw high demand and accounted for 74 percent of the market, adding that FDI was at record levels.

In HCM City, real estate accounted for the second highest level of FDI last year. Domestic developers still dominate the market, it said, listing Vingroup, Hung Thinh, Phuc Khang, Khang Dien, Novaland, Thu Duc House, Son Kim, CityLand, and Him Lam as some of the major players. In its document, HoREA said there were five hurdles facing the city real estate market in 2017, and they affected transparency and growth. It listed them as land-use fees, land acquisition, project sale, credit policy and administrative procedures.

Source: Vietnamplus

February 1, 2018 / by / in
Vietnam’s hotel and resort market must make changes to develop

Vietnam’s hotel and resort real estate needs to have a comprehensive plan to ensure its development is on the right track. According to Mauro Gasparotti, director of Savills Hotels Asia Pacific, the hotel and resort property market of Vietnam was growing, driven by strong increase in the number of foreign tourist arrivals in recent years.

vietnam real estate, vietnam hotel and resort, real estate news

Recent updates of the Vietnam National Administration of Tourism showed that the country received 11 million foreign tourists so far this year, representing a rise of 27.8 percent over the same period last year. The increase was thanks to the launch of a number of international flight routes, together with easier visa policies. Hotel occupancy rates saw a significant increase in major tourism cities such as Hanoi, Ho Chi Minh City, Da Nang and Nha Trang, according to Savills Hotels.

However, a majority of the hotel rooms were located in coastal areas while condotel count outnumbered resort rooms, Gasparotti said, warning that this would lead to serious competition in hotel room prices. He said several developers did not pay adequate attention to the planning of their projects, adding that some focused simply on building their hotel projects with as many rooms as possible without giving thought to how to increase the added value of their projects. It was critical for the hotel and resort real estate segment of Vietnam to have a comprehensive plan to ensure long-term sustainable growth, he said.

Vo Kim Trang from Savills Hotels also said developers needed to have a long-term vision. “Developers will need to know tourism trends and changes in tourist demand, which will affect the development of hotel and resort products in the medium and long terms, rather than just focus on revenue in the short-term.” Savills Hotels also pointed out that Vietnam lacked diversification in products compared with destinations such as Thailand and Indonesia. The global market was currently witnessing new kinds of developments, such as resort wellness, resort spa, co-working hub and hi-tech hotel.

Morris Sim from Next Story Group, a hospitality management, marketing, design, franchising, investment and development company headquartered in Singapore, said developers in Vietnam should diversify their hotel and resort products to meet the increasingly diversified demand of tourists. Sim also said the sharing economy and social marketing were significantly affecting the hotel and resort property market with a new technology-savvy generation showing a new trend for working and traveling. Next Story Group said hotels and resorts must make changes to maintain and improve competitiveness.

Source: Vietnamplus

December 18, 2017 / by / in