Việt Nam is one of Asia’s most vibrant property markets and a long-term strategic area for Savills. Mark Ridley, newly appointed Group CEO for Savills, spoke to Việt Nam News reporter Thu Hằng about how to attract foreign investment into the Vietnamese real estate market during a visit to HCM City last week.
How do you see Việt Nam’s property market? What factors will help it attract FDI in the next few years?
Việt Nam has come a long way since our office opened in 1995. It is now one of the global property hotspots. With robust fundamentals, a positive macro-economic outlook and continuous investment in infrastructure, the market is thriving across a multitude of real estate sectors.
GDP growth we are now getting is very very important. Foreign investors are looking for opportunities in Việt Nam. It is not just those investors but also corporations looking to relocate their facilities to Việt Nam.
A great work force, good cost space and access to a really educated talent pool of people are factors that more and more corporations are wishing to take advantage of.
With international companies relocating, you see international capital.
So I see not only an emerging market, I see capital coming out of the Asia PAC regions, Malaysia, Hong Kong, mainland China, but I also can see it coming out of the Middle East and also the US.
All of those markets are more mature, and when looking at Việt Nam, India and China as the emerging powerhouses, I see a very significant increase in international capital coming in over the next five years. It is very much on the global radar for investors.
You have strong rental growth in some of real estate markets. Prices have been increasing and also the stability. You haven’t got an oversupply. I think all those things are very positive from a foreign investor perspective.
What suggestions do you have for the Government to attract foreign investment in the property market?
The Government should give as much transparency to investors. They want security of capital when they invest. They want to know what they are investing in and it will be maintained.
You ensure sufficient security for the money coming in, by way of 50-year land tenure. Overseas investors also look at the lease structure of land holding as something important. The ability to renew leases in the future … some security around that will potentially help a greater degree.
Another element is infrastructure to ensure those wishing to invest in the market that the infrastructure and transport will improve, making sure all those elements are in place. And they are delivered under a master plan. That is important. But [so is] delivery, showing that these things will be completed in time.
All investors are looking for tax advantages, how they can structure with the local authorities and how they can work in partnership. So I think with more flexibility, they can provide joint ventures. Those are all important things.
When we see emerging markets, having the flexibility around that structuring is very important. So that the Government can achieve more flexibility to attract more foreign investment.
Do you think the global economic slowdown will affect the real estate market in Asia?
Inevitably if there was a significant economic slowdown it will have an effect. But do I see a significant slowdown? No. I see a slowdown in some markets but I don’t see it as a significant market slowdown.
I think the Asian real estate markets are some of the most attractive for global investors because they see economic growth in the markets and that is a very positive sign for the Asian real estate markets.
You could argue that the property markets are late cycle and getting quite expensive. But you got to remember all asset classes are expensive. So I think more money will be deployed into real estate alongside equities and gilts. The weightage from international investment will significantly go up in real estate. So I think sometimes when there is uncertainty in the market, more money goes into real estate. And I think that’s what we will see. So I don’t see a significant global slowdown as you say. — VNS