Indirect push from FDI for real estate market in the first 9 months of the year

Optimistic FDI picture in the first 3 quarters of the year

Newly released data from the General Statistics Office shows that the total foreign investment capital registered in Vietnam as of September 30, 2024, including newly registered capital, adjusted registered capital, and capital contribution and share purchase value of foreign investors, reached 24.78 billion USD, an increase of 11.6% over the same period last year.

According to the Foreign Investment Agency, Ministry of Planning and Investment, in September 2024 alone, the total FDI capital reached the highest level in the months since the beginning of the year, with nearly 4.26 billion USD, accounting for 17.2% of the total investment capital of the country in 9 months. The increased investment capital also reached the highest level since the beginning of the year with projects having large capital expansion.

FDI capital is concentrated in provinces and cities with many advantages in attracting foreign investment (good infrastructure, stable human resources, efforts to reform administrative procedures and dynamism in investment promotion...) such as Bac Ninh, Ho Chi Minh City, Quang Ninh, Ba Ria - Vung Tau, Binh Duong, Hanoi, Hai Phong, Dong Nai, Bac Giang, Ninh Thuan. These 10 localities alone accounted for 80.1% of new projects and 72.9% of the country's investment capital in the first 9 months.

The largest investment partners in the first 9 months were all traditional partners of Vietnam and came from Asia. The leading countries and territories (Singapore, China, South Korea, Hong Kong (China), Japan) alone accounted for 73.2% of new investment projects and 75.2% of the total registered investment capital of the country.

Commenting on the overall picture of FDI, Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam, said that there has not been much significant FDI activity in the real estate sector, especially in the third quarter. Most of the foreign direct investment capital is still focused on the manufacturing sector.

Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam

“However, the good news is that the investment structure in manufacturing has shifted positively. Instead of focusing on traditional industries such as textiles and wood, we are witnessing a significant increase in investment projects in high-tech fields such as electronics and component manufacturing,” Mr. Troy analyzed.

Data from the Foreign Investment Agency shows that many large projects in the fields of semiconductors, energy (production of batteries, photovoltaic cells, silicon bars), component manufacturing, electronic products, and products with high added value received new investment and capital expansion in the past 9 months.

The Deputy Managing Director of Savills Vietnam emphasized that this shift not only brings in large investment capital but also contributes to improving production capacity, creating many high-quality jobs and promoting the development of supporting industries.

“This means that Vietnam is gradually transforming from a low-cost investment destination to a high-tech manufacturing hub with higher added value. The nature of FDI inflows has changed significantly, especially in the third quarter, with a significant increase in investors from China and Hong Kong (China). This is largely due to the need to ensure stable supply chains, a current global trend,” Mr. Troy added.

Office, serviced apartment and industrial supported

According to a survey by Savills in its newly released market report on office leasing transactions in Ho Chi Minh City in the third quarter of 2024, the majority (73%) of transactions were aimed at relocating to better quality buildings. The Finance, Banking, Insurance and Real Estate (FIRE) sector led with 39% of the transaction market share, followed by ICT with 31% and manufacturing with 13%.

A large proportion (75%) of tenants are foreign companies, mainly from the US, Korea and Japan, while domestic companies account for only 25%.

Green certification is a concern for high-end office projects in Ho Chi Minh City as 63% of the upcoming Grade A and B supply will focus on meeting these standards to cater to large foreign tenants.

Demand for office space is growing strongly with projects meeting green certifications.

For the serviced apartment segment, in the southern region, the target tenants are mainly experts and business travelers in Ho Chi Minh City, Dong Nai and Binh Duong. FDI capital flows boost the accommodation demand of experts, however, FDI capital in Ho Chi Minh City has decreased. According to the Ministry of Planning and Investment, in the first 8 months of 2024, total FDI capital in Ho Chi Minh City decreased by 11% year-on-year to 1.8 billion USD, while Dong Nai increased by 41% year-on-year to 1.3 billion USD and Binh Duong increased by 7% year-on-year to 1.4 billion USD.

In the North, FDI sources are distributed in Hanoi and have spread to provinces such as Phu Tho, Bac Giang, Thai Nguyen, Vinh Phuc. This has increased the growing housing demand of foreign experts. However, Savills' Q3 market report analyzed that neighboring provinces have limited supply of serviced apartments and low quality, so the demand for housing options for foreign experts is still concentrated in Hanoi.

“Although still ongoing, the growth rate of FDI has slowed down significantly compared to previous years. This is partly due to the decline in large investment projects in energy, especially liquefied natural gas and high-value energy projects (from 2-4 billion USD) that have taken place in recent years. However, the trend of foreign direct investment continues, showing a positive outlook,” Mr. Troy added.

Along with that, Mr. Troy Griffiths also assessed that the Government's new policies have brought a breath of fresh air to the business environment, especially in the field of trade. Successful efforts in the fight against corruption have created a solid foundation for Vietnam to focus more on economic development. The active participation of senior leaders, including strengthening economic diplomacy, shows Vietnam's determination in attracting foreign investment.

Source: https://www.congluan.vn/luc-day-gian-tiep-tu-fdi-cho-thi-truong-bat-dong-san-9-thang-nam-2024-post316899.html