The foreign direct investment (FDI) capital flow into the real estate sector has been slowing down recently. However, experts believe that this is just a necessary period of rest before the foreign investors prepare for a new landing in Vietnam.
Analysts have predicted a new wave of FDI capital flow into the real estate sector which would be seen in the next few months. They say that the Vietnamese real estate sector now shows all favorable conditions for foreign investors to earn money.
A lot of real estate projects have been delayed due to the lack of capital, caused by the tightened monetary policies. Therefore, the developers of the projects are trying to transfer the projects, which is really a golden opportunity for foreign investors to buy back the projects at low prices.
Meanwhile, in the first two months of the year, Vietnam received only one FDI project in the real estate sector with the registered capital of 100,000 dollars – a modest sum. The figure represents a sharp fall from the FDI capital in the golden age of 2008, when the registered FDI capital in the sector reached 23 billion dollars.
Phan Huu Thang, Director of the Foreign Investment Research Institute, a unit of the Hanoi National University, has noted that the lack of capital for project implementation has been badly affecting not only domestic, but foreign investors in Vietnam as well.
“The worsening real estate market has forced foreign investors to interrupt the investment or lengthen the implementation period, while waiting for their opportunities,” Thang said.
The decline in the FDI capital flow into the real estate sector has been attributed to the fact that foreign investors have to deal with their own problems caused by the global economic crisis. The investors do not have enough money to implement a lot of projects at the same time.
Besides, as the Vietnamese real estate market is facing many problems, including the low liquidity, few transactions and the credit tightening policy, foreign investors need a time of rest to think about what they should do in the next steps. Meanwhile, the oversupply has been warned for the high end apartments and resorts – the market segment in which foreign investors have advantages.
However, analysts believe that foreign investors do not intend to abandon the plan to invest in Vietnam. They are still waiting for the opportunities to penetrate the market which they believe have great potentials.
The US Las Vegas Sands has expressed its willing to pour billions of dollars to the resorts in Hanoi and HCM City. Most recently, Thai Trinity Company has opened a 30 million dollar fund which would disburse for the low cost investment projects in Vietnam.
Oliver Smith, Investment Director of Trinity, has noted that the opportunities are awaiting foreign investors at this moment, when the market is quiet and many investment funds plan to quit the market.
He said that a lot of investment funds, which are holding big volumes of properties, now want to sell the assets when they are about to close the funds as scheduled.
Marc Townsend, General Director of CBRE Vietnam, also thinks that the FDI capital flow into the real estate sector would increase rapidly in the time to come, because 2012 is believed to be the end to the recession period.
One of the signals showing that the FDI capital would return is that the real estate market recently has witnessed a series of the merger and acquisition deals.
CBRE has predicted that the FDI capital into the real estate sector in 2012 would be triple that of 2011, with the presence of 20 foreign investors.
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