Foreign investment helps revive housing market

By Thien Ly

Property services firm CBRE said the Vietnamese housing market is attracting the attention of foreign investors. In 2013 FDI in the sector amounted to around $1 billion. This year it ranks only behind the manufacturing sector in terms of investment.— File Photo

Compiled by Le Hung Vong

Liberal policies and incentives from the Government and huge foreign investment are gradually pulling the property market out of its long slump.

Phan Thanh Huy, general director of developer Novaland, said in the first four months of 2014 his company sold some 2,300 apartments in three property projects in HCM City.

These include 1,600 in Sunrise City in District 7, nearly 500 in Lexington in An Phu Ward, District 2, and nearly 200 in Galaxy on Nguyen Khoai Street, District 4.

Huy said these projects sold well despite the stagnancy in the housing market because of their "good prices" and prime locations.

A spokesperson for National Housing Organisation Company (NHO) said the Korean company would soon invest over VND20 trillion (US$950 million) in 14 property projects in Ha Noi, Hue, Quang Ngai, Da Nang, HCM City, and An Giang.

NHO will invest some VND4 trillion ($188.67 million) in a 79ha residential complex in HCM City's Binh Chanh District and develop its 51ha An Phu Sinh Residential Complex in Quang Ngai into one of the best in the central region.

The NHO management has said that the $950 million investment will fulfill the company's commitment to the Ministry of Construction to sell some 100,000 apartments in the next decade.

The biggest foreign-invested property projects this year include a $200 million residential complex in HCM City's Binh Thanh District to be built by Sunwah Viet Nam, a $2.5 billion resort complex in Vung Ro, Phu Yen Province, by US developer Rose Rock and Vung Ro Oil and Gas Co Ltd, and the $300 million Alma Resort in Khanh Hoa Province.

The latest report on the housing market from the construction ministry confirms that the market is rebounding with the number of properties traded in both HCM City and Ha Noi being much higher than last year.

In HCM City, 1,300 transactions were reported in the first four months. Bank lending for property transac-tions amounted to over VND266 trillion ($12.547 billion).

Opinion mixed

There are varying opinions about the plan to amend the law to allow foreigners and Viet kieu (Overseas Vietnamese) to buy and trade houses in Viet Nam, which is on the National Assembly's agenda last week.

Economist Pham Chi Lan said most beach resorts in the country and "golden" plots of land in major cities such as Ha Noi and HCM City are owned by foreign investors. "If foreign investors are allowed to do business without any limit at a time local investors face difficulties, major projects in prime locations will fall into foreigners' hands," Dau Tu (Investment) newspaper quoted him as saying.

Cao Sy Kiem, chairman of Medium- and Small-size Enterprises Association, said allowing foreigners to buy and own houses in Viet Nam is reasonable, but the amended Real Estate Law would be too "loose" if it allows foreigners to buy houses without any limit. "An effective management mechanism is required," he said.

Nguyen Dinh Chien, chairman of the Ha Noi Lawyers' Association, said authorities should carefully consider all related issues before allowing foreigners and Viet Kieu to trade houses, and not allow foreigners to buy and sell houses "without any conditions."

Foreigners should never be allowed to own or trade properties in "restricted" areas such as those near military installations, political centres and borders.

However, many analysts have voiced support for allowing foreigners to unconditionally buy and own houses.

Former Deputy Minister of Resources and Environment Dang Hung Vo said there is no need to worry that this would spark off speculation and cause bubbles in the housing market. The property market has been opened [for foreigners] since 2009 but has met a fourth of its demands, said Vo.

According to Vo Cuong Quyet, director of property services firm Dat Xanh Mien Bac Co, foreigners only buy expensive houses and apartments, a segment that is saddled with huge inventories.

Tran Nhu Trung, deputy director of Tan Hoang Minh Group, said: "The full and equal participation of foreigners in the property market will contribute greatly to the country's economy."

It would help showcase Viet Nam's liberal policies to the rest of the world and attract more foreign investment into the country, he said.

Traditional markets

Many traders at traditional markets in HCM City are opting out because of poor sales since people prefer to buy at impromptu markets that spring up on pavements.

Traditional markets such as Phu Nhuan (in Phu Nhuan District), Go Vap, Hoang Hoa Tham, Pham Van Hai, and Vo Thanh Trang (in Tan Binh District) have all encountered the problem.

The owner of a garment shop in Pham Van Hai Market said sales at her market this year was down to just a third of that of last year. The profit she makes from her shop is enough only for buying food and paying tax, she said. "We are unhappy to see many shopkeepers in this market trying to sell the ownership of their kiosks/shops."

Nguyen Thi Loan, another garment seller at Pham Van Hai Market, said the price of a shop has dropped from 25 taels of gold (VND36 million each) five years ago to less than VND200 million recently.

"But despite the much lower prices, it is difficult for shop owners to sell them."

Nguyen Giang Do of the Pham Van Hai Market management board, said this year alone 52 shopkeepers have asked to suspend their business.

Though garment shops are not doing very well, they are doing much better than vegetable and fresh food shops, he revealed.

Nguyen Van Duy of the Vo Thanh Trang Market (Tan Binh District) management board said each year the board gets 20 to 30 requests from shops to close.

Convenience shops, supermarts, and unlicensed pavement markets are all blamed for the situation.

Most traders in Section C at Pham Van Hai Market work in the morning and go home in the afternoon, leaving hundreds of kiosks closed, while unlicensed markets nearby, like the ones on Duong Van Nga, Dinh Dien, and Tan Son Nhi streets, are packed with sellers and buyers, Do said.

He said 600-700 hawkers gather in one of these market, selling vegetables and foodstuff.

The sellers do not have to pay tax or management fees while buyers do not have to pay to park their motorbikes, he said.

Authorities have no control over these markets, he lamented.

The Pham Van Hai Market authorities have exhorted Tan Binh District authorities to take action but have yet to hear back, he said.

Meanwhile, the situation at his market is worsening by the day, he said. — VNS