VIETNAM REAL ESTATE - THE DESTINATION OF JANPENESE INVESTMENT
23/08/2016|INDUSTRY NEWS
There is an optimistic signal that many domestic real estate investors may be interested. According to the assessment of market consulting firm JLL, in the next decade, it is likely that a new wave of international investment from Japanese corporations and real estate funds will appear, reminiscent of the wave. similar in the 1980s when Japanese investors rushed to buy assets overseas.
Perspective of Binh Duong New City, Becamex Tokyu joint venture. Source: SGGP
According to JLL estimates, the largest institutional investor in Japan can invest more than $ 500 billion directly. This is partly reflected in changes in the action plans of investors in this country, of which Southeast Asia is considered a potential area.
In fact, over the past 1 year, Vietnam's real estate market is one of the destinations of Japanese investment flows. Sanyo Homes Corporation, for example, recently cooperated with Tien Phat on an apartment project in District 7, Ho Chi Minh City worth about US $ 25 million.
According to Mr. Le Quoc Duy - Chairman of Tien Phat Board of Directors, the two sides will cooperate to develop real estate projects in Vietnam and Tien Phat will help Sanyo Homes to penetrate deeply into this promising market, and at the same time. catch the investment wave of players from the land of cherry blossoms in the near future.
Or as Mitsubishi Corporation recently announced a cooperation plan with Bitexco Group to develop a project with a scale of up to 8,700 apartments in Hanoi, worth more than US $ 286 million. In the joint venture to carry out the project, Mitsubishi will hold a 45% stake.
According to the Nikkei Asian Review, the group's move is part of a new strategy aimed at the rapidly growing middle class in Asia. In addition to Vietnam, Mitsubishi also develops projects in China, Indonesia and the Philippines.
After years of slow coordination with Becamex to develop the Binh Duong New City project, partly influenced by the downward market in 2008-2012, it seems Tokyu Group is returning.
Recently, the group announced that it would begin investing in a $ 800 million project to build 9,000 houses in Binh Duong. Each apartment will have a large area, from 260 - 330m2 to serve the accommodation needs of foreign experts working in this industrial province.
Obviously, the Housing Law 2014 is bringing about major changes to the real estate market, by allowing foreigners to own houses in Vietnam with quite open regulations compared to neighboring countries. That is also why Japan's leading real estate fund, Creed Group, continuously poured capital into Year Seven Seven, acquiring Phat Dat's EverRich 2 project.
Two Japanese companies, Hankyu Realty and Nishi Nippon Railroad, have also joint ventures with Nam Long Company to deploy a series of Flora Anh Dao, Fuji Residences, or Valora product lines and high-end villas.
Besides the segment of residential apartments, offices have also become targets of Japanese businesses. In the first quarter of 2016, a Japanese investor spent about US $ 47 million acquiring 70% of the value of the A&B Tower office building in the heart of District 1.
Not stopping there, according to the Nikkei Asian Review, the Japanese government and its private businesses are studying to set up a financial project to create conditions for the middle class of Vietnam to own a home. The total estimated initial capital of the project is about 192 million USD. In particular, the Japan International Cooperation Agency (JICA) is responsible for granting half of the capital in the form of formal loans with low interest rates.
Stepping up seeking opportunities in emerging markets like Vietnam and other Southeast Asian countries is part of the Japanese business's efforts to find growth outside Japan - an economy that is still growing. During a period of deflationary growth, sluggish growth in housing demand is affected by an aging population. Moreover, the Japanese government's strengthening of economic stimulus measures also helps boost export activities of capital outward.
According to Japanese consulting firm Asterisk, the laws have also been adjusted to make it easier for foreign investors to invest abroad. For example, the government has allowed listed real estate trust funds (REITs) to invest abroad.
Asterisk estimates that these trust funds have the potential to use 5-10% of the total capital under management to invest abroad in the near future. The capitalization of the trust funds at the end of February amounted to 11,500 billion yen (approximately VND 2.5 million billion at the current exchange rate).
Investment funds such as public and private pension funds are also potential investors, with each investment scale of up to USD 50 - 100 million.
But the question is whether domestic businesses can take advantage of this opportunity? An Gia, Nam Bay Bay, Nam Long and Tien Phat proved possible. Worth mentioning, the biggest weakness of Vietnam market is still less transparent information. Legal risks and sinking costs could be major barriers to Japanese investors' policy towards Vietnam.
