Vietnam ranks 2nd in Asia-Pacific in attracting foreign real estate investors

Consultants CBRE have recently released the results of a survey detailing the intentions and plans of real estate investors in the Asia-Pacific region during 2024.

Vietnam ranks as the second-most attractive real estate market for investors in the Asia-Pacific region this year, just behind India and ahead of Thailand.

This is seen as a positive sign, reflecting the potential Vietnam’s fast-growing economy holds as well as the increasing trend of foreigners wanting to purchase property in the country.

Information from CBRE Vietnam shows that investment flows into Vietnam have mostly come from Asian investors in familiar places like Singapore, South Korea, Japan, and Hong Kong (China).

The scale of each transaction usually hovers around $20-$50 million. Financial funds in more developed markets like North America, meanwhile, have yet to deeply penetrate into the market.

Furthermore, a large number of individual real estate investors have begun to show interest in Vietnam. According to figures from the Ministry of Construction, around 4 million people have expressed interest in acquiring real estate and housing in Vietnam, including foreigners and overseas Vietnamese.

The country’s real estate market is poised for significant growth this year, with a substantial increase in the number of domestic and foreign investors. Rising demand and high potential for development has transformed Vietnam’s real estate market into a promising investment hotspot for capital flows and investors.

Mr. David Jackson, Managing Director of Avison Young Vietnam, believes that the Asia-Pacific region, including Vietnam, holds substantial potential for attracting large investments compared to other regions in the world.

Factors such as a young population, economic growth, and consumer preferences in the region indicate long-term positive prospects. Such prospects are especially appealing to capital flows amid a world influenced by conflict and economic disruptions.

According to Statista, Vietnam’s real estate market is expected to reach a value of $4.41 trillion this year, surpassing Thailand’s $2.51 trillion.

Vietnam’s real estate market presents a unique landscape where the investment portfolio only includes a small amount of income-generating property that are rarely available on the market. Most investors entering Vietnam tend to focus on industrial and office real estate.

The country’s robust economy, with a focus on exports, has propelled commercial activities, creating strong demand for efficient supply chain management and logistics. Investors recognize the potential from these drivers, hence the keen interest in industrial real estate.

In addition to commercial real estate, land for residential development in Vietnam continues to attract strong interest from investors both foreign and domestic, many of which are actively searching for properties being offered at a discount or that have owners facing legal or financial troubles.

This trend highlights the potential for recovery and attractiveness of the residential segment in Vietnam. CBRE Vietnam said a value-added strategy would be the most prioritized investment strategy in 2024.

Specifically, more than 60 per cent of foreign investors have plans this year to upgrade buildings at strategic locations in their portfolios in accordance with ESG (environmental, social, governance) standards.

Most of these investors are private funds, real estate funds, and real estate investment trusts. This trend also aligns with the pursuit of a value added strategy.

Mr. Nguyen Pham Anh Duy, Director of Investment Advisory at CBRE Vietnam, said investors with a long-term vision of Vietnam’s economic potential are willing to invest capital that can benefit immediately from the recent price adjustment cycle.

This is particularly true in the current situation, where buyers benefit from sellers who are existing investors in the market and need to divest after holding assets for a certain period.

Foreign investors are actively seeking and increasing their presence in Vietnam. Recent interest rate cuts in Vietnam have also made the market more attractive.

Against this backdrop, in the entire region, the interest rates being set by central banks and economic instability continue to be the main concerns for investors in 2024, despite them having subsided significantly compared to last year. The difference in expected selling price between buyers and sellers remains one of the greatest obstacles in transactions, though price adjusting cycles have occurred in most Asia-Pacific markets in 2023.