While home prices in London, Hong Kong, New York and Sydney keep skyrocketing, Vietnam is now emerging as an attractive location for global real estate investors.
Goodwin Gaw, Chairman of Hong Kong-based private equity firm Gaw Capital Partners told Bloomberg that Vietnam is where Southern China was 10 or 15 years ago. He said it is no longer a sure thing considering home prices have been increasing steadily over the past 18 months, but “long term it’s still very good if you’re able to hunker down.”
According to CBRE, prices for luxury condominiums in Ho Chi Minh City rose 17% last year to an average of $5,518 per sqm. The prices are expected to climb around 10% to US$6,000 per sqm by early 2020. That is nearly double the price for a typical high-end apartment in HCMC, it’s still much lower than the cost in Hong Kong, Singapore and Tokyo, which are the world’s least affordable housing market.
There is huge interest for investing in Vietnam, said Ilsang Cho, a spokesman for Hana Tour, a South Korean travel agency that arranges multi-day package tours to Vietnam to visit apartments.
Along with the strong demand from overseas investors, the latest wave of buyers are newly prosperous locals. A report by Knight Frank showed the number of Vietnamese with net assets of $30 million or more increased by 320% from 2006 and 2016, the fastest pace globally ahead of India and China.
Chris Freund, founder of private-equity firm Mekong Capital pointed out many Vietnamese have built their wealth with real estate. Vietnam’s home ownership rates exceed 90%, one of the world’s highest rate. Growing values mean there are middle-class families with dwellings in excess of $1 million.
Property developers used to focus on the middle class but are now turning their attention to the more affluent, said Neil MacGregor, a managing director at Savills Vietnam. He added more and more rich Vietnamese, particularly entrepreneurs are looking for places to put their money.
