Viet Nam has more real estate investment opportunities than other more mature Asia-Pacific markets, although certain difficulties remain. The standout prospects are in industrial, logistics, and Grade A office in Ha Noi and Ho Chi Minh City. Mr. Matthew Powell, Director of Savills Hanoi highlights real estate investment trends for 2021.
Viet Nam is under increasing attention from overseas real estate investors. Over the year there has been notable growth in e-commerce, which in turn has accelerated the logistics sector. Hospitality remains challenged, but investors are anticipating recovery with Covid-19 vaccines opening the potential of travel bans being lifted. The resilient economy with growth forecast for 2021 has resulted in extensive planning from local and global investors.
Real estate investors from more mature Asia-Pacific markets with more limited Real Estate growth potential such as Japan and South Korea, see extensive opportunities in Viet Nam. Increasing numbers of Japanese and Korean investors are looking to the local market, assessing land options at the right price.
Viet Nam is advantaged by its potential, although investments depend on industry and location. Most investors focus on the two key cities, Ha Noi and Ho Chi Minh, while others are expanding horizons to locations such as Hai Phong. The main barrier is finding land at reasonable prices, which adds difficulty to foreign investors competing with local investors and developers. Overseas investors should also be aware of potential difficulties associated with legally transparent land auctions and purchasing land.
Some domestic developers focus mainly on residential real estate, while other more specialist investors have nimbly pivoted to the burgeoning industrial and logistics sector from apartment or resort development. The cost of logistics in Viet Nam is still high compared to other countries in APAC region . However, logistics are gradually becoming more competitive under new and improved infrastructure networks including the construction of new airports in the south, new highways and new ports. This improvement is partly being driven by domestic consumer demand resulting from increasing e-commerce and visiting physical stores . Increasing requirements for supporting infrastructure, cold storage, warehousing, and logistics will make these key investment areas in 2021.
Some domestic developers focus mainly on residential real estate, while other more specialist investors have nimbly pivoted to the burgeoning industrial and logistics sector from apartment or resort development. The cost of logistics in Viet Nam is still high compared to other countries in APAC region . However, logistics are gradually becoming more competitive under new and improved infrastructure networks including the construction of new airports in the south, new highways and new ports. This improvement is partly being driven by domestic consumer demand resulting from increasing e-commerce and visiting physical stores . Increasing requirements for supporting infrastructure, cold storage, warehousing, and logistics will make these key investment areas in 2021.
For individual investors, real estate remains a favourite investment channel for its mid-term capital growth potential. Limited residential supply in 2020 has made investment opportunities risky. Longer-term strategies are needed with careful research to determine the most suitable investments. Considerations of quality are required in construction, and in accessibility of supporting roads infrastructure and new metro lines.
Ha Noi and Ho Chi Minh city remain favoured by individual investors, although opportunities are emerging in secondary cities such as Hai Phong. There are longer-term investment opportunities in the Branded Residence model. These are apartments or villas developed and operated by better known Hospitality brands, including international hotels.
For the resort market, opportunities are presence as the market is developing large, complex projects with casinos, theme parks, and additional attractions . Though there will be operational difficulties during the development , some projects have already been planned and implemented . However, the market will still welcome independent and traditional resorts. Some projects in central Vietnam are being developed, and despite operating during this tough time, they are expected to become the model for future complex resort projects.
For the past few years, resorts in Vietnam have gradually become more diverse, especially in the North with mountain resorts. Locations and attractions within one or two-hour drive from the city are gaining popularity with health concerns around air travel. The recent growth of the resort market is thanks to the domestic tourism and the shift of people wanting to explore internally rather than abroad.
For the retail market, despite having difficulties in the past year, many developers are still planning, aiming for higher quality, design, and management . Retail is shifting to more experiential-based models, such as entertainment , education, or sports. Since retail projects are often management-heavy, developers need to have a clear strategy on the tenancy mix and focus more on customer journey in the design phase. There are certainly opportunities in the market, but it requires investors that are retail-familiar.
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