Real Estate Investment: A Promising Trend for FDI in Vietnam

Since the Vietnamese government has decided to pursue an open-market economy, the country has seen significant improvements in all of its business sectors, this is also thanks to various investment incentives, an abundant labor force as well as promising business opportunities.

According to recent research, in 2017, industry and construction resulted in the most attractive sector for FDI investors, with the processing and manufacturing industries reaching USD 15.87 billion, equal to 44.2% of the total FDI.

However, in 2018 there is a new trend of FDI investment in Vietnam, with remarkable projects emerging in the real estate sector. In previous years, the rate of real estate investment has remained quite stable with USD 3.05 billion dollars, 8.5% of total FDI in 2017, however, in the first 6 months of 2018, the real estate sector ranked second (after the processing and manufacturing industry) with the total investment capital equal to USD 5.54 billion, 27.3% of total registered investment capital.

Besides Japan, which is now deemed as one of the biggest real estate investors in Vietnam, the  sector also attracts investors from Korea, Singapore, USA and China, with multi-million dollar projects. In fact, the largest foreign-invested project in 2018 is the Smart City project in Hanoi, which has amounted to a sum of more than 4 billion USD.

The main reasons for this potential development, include a stable growth of the economy, especially in the tourism sector with an increasing number of foreign visitors every year which encourages real estate enterprises to invest in luxurious resorts and hotels.

Vietnam, a market of about 100 million people, with a youthful population structure and a significant increase in income per capita, seems to be an extremely attractive opportunity for apartment and office building investments.

Moreover, the real-estate business environment and management in Vietnam has begun to become more professional in nature, with American and European enterprises choosing to invest in the field of real estate management and related services.

Furthermore, infrastructure has been significantly improved in recent years, convenient access routes to the central area will help improving the prospects of urban development in the near future. The government is also working to simplify administrative procedures and improve the competitiveness of the business environment in order to attract more foreign capital into Vietnam.

The real estate market in 2018-2019 is therefore evaluated to be very exciting, offering many opportunities, and on its way to becoming a very promising sector for both foreign and domestic investors.