With tremendous momentum, strong economic growth and rising middle class, fast-growing incomes, and a highly educated young population, rapid urbanization, Vietnam has become one of the countries with the fastest GDP growth rate in the world. According to the World Bank, Vietnam's GDP increased by 6.8% in 2018.
According to Vikram Kohli, General Manager, South East Asia, CBRE, Vietnam's biggest attraction lies in the potential for future growth when the stock market has the best increase in Asia in 2017 and Southeast Asia's second largest retail market in 2018. From 2015, most of the large value M&A deals are land, followed by hotels, apartments and offices. This is a real testament to the fact that investors have long-term commitment in Vietnam.
Vietnam Real Estate – an emerging star of Asia.
Along with the strong demand for commercial projects, there is a shortage of supply, especially in the retail and office space market in Hanoi and Ho Chi Minh City. The average rent of Grade A office buildings in Ho Chi Minh City increased from $35/sqm/month in Q2/2016 to $43/m2/ month in Q2/2018, equivalent to an increase of 23%. Hanoi office leasing market recorded similar growth.
The housing segment is also attracting a steady demand and this segment is expected to further boost economic growth - demonstrating that this year's largest IPO transaction is the investment of the Singaporean Government - GIC has invested in a reputable local investor in the high end housing segment.
Singaporian, Hong Kong and Taiwanese investors focused on the condominium and serviced apartment markets, with clients in these segments accounting for 75% of the total market for the rental market. Foreign customers account for up to 50% of the total number of transfer transactions.
Vikram Kohli also said that the government's efforts to reduce barriers to foreign ownership in public companies also helped to make the outlook of the economy brighter. These policies help diversify the picture of the economy and encourage foreign investors to own commercial assets.
In line with the growing trade tension between the United States and China, Vietnam will benefit from the relocation of manufacturing plants out of China. Although there are certain concerns about the impact of credit tightening and geopolitical instability, this may lead to some short term constraints.
"The recovery of the real estate market from 2015 to now shows that sometimes the correction of the market is a positive signal in the long term. A simple view is that when looking at the involvement of foreign capital in Vietnam in most of the largest property transfers this year in the office, residential and retail segments, we can feel the excitement of foreign investors in Asia's emerging star," said Vikram Kohli.
