According to the City Momentum Index (CMI) released by JLL, Asia Pacific is home to 19 of the top 20 cities, emphasizing the continuing shift of fast urban growth from the West to the East.
JLL City Momentum Index: The world’s top 20 most dynamic cities.
Vietnam has a strong presence in the rankings with both Hanoi (3) and Ho Chi Minh City (8) in the CMI’s Top 10. In particular, Ho Chi Minh City is generally considered the more business-friendly destination luring more foreign investment, along with a higher corporate presence. Meanwhile, Hanoi has lagged commercially but the capital city is also evolving rapidly.
Manufacturing is one of the major forces of Vietnam’s economic growth, driven in part by robust demand from China. Vietnam is viewed as a lower-cost alternative to China, and FDl has grown on the back of this; while escalation of the China-US trade war between may benefit Vietnam’s economy in the long run. In fact, both Ho Chi Minh City and Hanoi are pulling in expanding levels of investment from large multinational technology firms, including Microsoft, LG, Intel and most notably Samsung. Investment inflows from these giants have not also boosted the manufacturing sector but also contributed to the growth of the local real estate market.
Ho Chi Minh City and Hanoi are pulling in expanding levels of investment from large multinational technology firms, including Microsoft, LG, Intel and Samsung.
Stephen Wyatt, Country Head of JLL Vietnam, says “Vietnam continues to attract significant interest from foreign investors in all sectors of the property market. The market is becoming more attractive recently on the back of a rise in purchasing power, growth in consumer retail spending, and an expansion in urban population and young demographics.”
However, Vietnam has a small real estate investment market struggling with issues such as low transparency and a limited volume of investment grade stock. In addition, rapid growth has also made these cities face environmental and social problems such as inequality, traffic congestion and environmental pollution.
Headway is being made to improve transparency, such as enhancements in access to the land registry, better valuation practices and the increasing application of green building certification system such as LOTUS and LEED.
In sum, Wyatt says it takes long-term foreign direct investments to nurture a sustainable momentum and a maturing economy. Especially in real estate market, the transparency of governance and infrastructure are really vital for investors’ decision.
