A report in Saigon Giai Phong says the Vietnamese property market has great potential, but foreign investors are still showing caution due to continuing economic turmoil.
Foreign direct investment accounts for 25% of Vietnam’s property market, with foreign investors registering to carry out 669 property projects worth US$60 billion during the first half of 2011, the majority of them being located in Ho Chi Minh City. According to the vice chairman of the Vietnam Real Estate Association, Pahn Huu Thang, a considerable number of property projects worth billions of dollars have failed, and investment permits have been withdrawn. Projects which remain uncompleted include Bai Bien Rong (Dragon Beach), located in the central province of Quang Nam, which has a registered investment of US$4.15 billion.
Some of the biggest problems with investing in Vietnam include concerns investors have about the inflation rate, the high lending rate of between 22% and 25% annually, the government’s credit growth cap of 20%, and state-owned firms low business efficiency. The investment firm VinaCapital, which provides foreign investors with local knowledge, thinks these things need a substantial improvement for foreign investors to be encouraged to enter the market.
At the moment, many international investors are looking towards emerging markets such as Vietnam, Thailand, Indonesia and India. Vietnam is currently rated as being the second most attractive investment destination in the region, comes 12th in the world’s top 20 of favourite FDI destinations. The largest group of foreign investors in the country are from Taiwan, followed by Korea, Singapore, Japan and Malaysia.