Vietnam’s real estate market hot but complicated

The real estate market in Vietnam is hot and complicated, said Julien Sausset, Commercial Director of MIPIM Asia, the organiser of the world real estate exhibition MIPIM Asia 2007, during his trip to Vietnam to survey the market in early May.

Mr Julien said: “We have learnt from surveys and discussions with investors, individual and institutional real estate traders in HCM City and Hanoi that Vietnam’s real estate market proves to be hot and have a lot of potential, but is relatively complicated.”

It is a market with potential because the developing economy will lead to the high demand for property to serve production and accommodation. The market has been described as complicated because it is not as transparent as investors expect.

Mr Julien said that the procedures to licence projects in Vietnam proved to be very complicated. It also takes time to get site clearance. Moreover, investors are also concerned about the procedures to send money abroad.

Many investors still hesitate to make investment in Vietnam as they do not know how to tackle the said problems, while other investors try to do business in Vietnam through domestic partners, Mr Julien said.

He has found that the leasing fee rates for hotel rooms, high-grade apartments and offices in the central areas of Hanoi and HCM City prove to be relatively high compared to other regional countries. He said that the shortage of hotel rooms, apartments and offices would continue for some time more as the demand still far exceeds the supply.

Regarding the civil construction market, the market has warmed up after a long time of freezing thanks to the high economic growth rate, which has led to the higher demand for accommodation.

“I think there are many opportunities for domestic and foreign real estate investors,” Mr Julien said. The thing that domestic investors need to do is to choose the right foreign partners and suggest projects which can meet the market demand.

During the trip, Mr Julien had meetings with the HCM City Real Estate Traders Association, introducing the international real estate exhibition to be held in Hong Kong from November 28-30, 2007. Some 3,000 real estate traders in the world have registered to attend MIPIM 2007, up by 49% over last year.

Source: VNE