news Published on May 7, 2019

FDI to Vietnam’s property market increases 36% in Q1


Most of the capital influx was poured into the industrial property segment through mergers & acquisitions (M&A) deals.

Foreign direct investment (FDI) in Vietnam’s property market reached USD 1.1 billion in the first quarter, up 36% year-on-year, according to Nguyen Manh Khoi, deputy director of the Construction Ministry’s Department for Housing and Property Market Management as reported by local media.

Most of the capital influx was poured into the industrial property segment through mergers & acquisitions (M&A) deals, Khoi said at the forum discussing Vietnam’s property and financial market in 2019 held recently.

Such trend is growing despite the State Bank of Vietnam (SBV)’s tightened grip on credit growth in this sector, Khoi continued.

However, he expected new policies as well as improvised legal frameworks to have positive impacts on the real estate market.

According to Khoi, the revised drafts of the Investment Law and the Corporate Law are scheduled to be submitted to the National Assembly, aiming to ease investment conditions and expand business lines for enterprises, while the revised Construction Law and Housing Law also create a better environment for investments.

Khoi added in the coming time, the Build and Transfer (BT) contract form may be restricted and could be replaced with land rights auction.

Meanwhile, there would be new financial models to support the growth of the real estate market, including investment fund, house saving fund, among others.

As the SBV moved to limit the concentration of credit on real estate, this would present opportunities for enterprises to revise their strategy and investment resources, he said.

At the forum, a representative of the Vietnam Association of Realtors (VARs) said the real estate market in the first quarter showed sign of slowing down, especially the housing supply at two major markets Ho Chi Minh City and Hanoi.

In the January – March period, total housing supply in Hanoi reduced by 25% year-on-year, while that of Ho Chi Minh City was down 50%.

Slow process of approving new projects and limitation on credit growth were attributed to such decline.

As of April, foreign investors committed to pour USD 14.59 billion into Vietnam, marking a four-year high and up 81% year-on-year.

Disbursement of FDI projects jumped to USD 5.7 billion in during the period, representing an increase of 7.5% year-on-year.

The data shows that out of 80 countries and territories investing in Vietnam in the four-month period, Hong Kong (China) took the lead with USD 4.7 billion, accounting for 32.5% of total investment.

The Republic of Korea came second with USD 1.98 billion or 13.6% of total investment, while the third place belonged to Singapore with USD 1.87 billion or 12.8%.

China and Japan claimed the fourth and fifth places with USD 1 billion and USD 700 million, respectively.