JLL: Vietnam's real estate has strong opportunities
Vietnam's economy continues to rise as people flock to the big cities.
Vietnam is a rising star in terms of real estate investment with strong opportunities in the office, residential and retail sectors, according to latest data released by real estate consultant JLL.
Occupancy of Grade A office space in Ho Chi Minh City exceeded 95 percent in the fourth quarter of 2016, while retail occupancy in the city’s CBD was over 92 percent for the same period. In the residential sector, the number of new apartments launched increased by 46 percent from 2015 to 2016.
Mr. Chris Fossick, Managing Director, Singapore and Southeast Asia, JLL, said, “The real estate sector in Vietnam has been hitting its stride since 2015, spurred in part by recent government reforms, such as stronger financial requirements for property developers and the relaxation of rules on foreign investment.”
He added that with the rapid expansion of Vietnam’s consumer market and the economy transitioning towards higher value activities, there have been significant levels of foreign direct investment and the construction of office, retail and hotel stock to meet growing demand. “As a result, we’re seeing a strong demand for office space, particularly in the financial services, law, manufacturing, consumer goods and technology sectors,” he said.
FDI into Vietnam recorded $15.8 billion in 2016 while FDI into the real estate sector reached nearly $1.7 billion at the end of 2016.
JLL said that Southeast Asia remains a bright spot amid a subdued global economic outlook, as ASEAN economies continue to grow at 5 per cent per year compared to a global growth rate of 3.5 per cent per year.
According to Mr. Stephen Wyatt, Country Head, Vietnam, JLL, Vietnam is on the rise as increasing levels of foreign direct investment (FDI) have been supporting strong economic growth and have been driving development across the country. Its big cities, Ho Chi Minh City and Hanoi, are at the forefront of the transformation as more people flock to its urban centers as new high-rise buildings change its skylines.
Vietnam’s upward trajectory looks set to continue, despite the slowdown affecting other Asian countries. It posted GDP growth of 6.2 percent last year – a figure that’s forecast to rise to 6.7 percent this year amid the growing affluence and higher consumption levels of the country’s middle class who are developing a taste for foreign brands from Starbucks to Louis Vuitton. Vietnam’s middle class is expected to double to 33 million people by 2020 while Ho Chi Minh City is home to Southeast Asia’s fastest-growing middle class, according to Boston Consulting Group.