Time for foreign investors to realize their commitments

The year 2024 will see a series of handshakes between foreign and domestic enterprises to develop real estate projects. And 2025 is the time to realize this relationship.

Real estate market in 2025: The time when foreign investors realize their commitments

The year 2024 will see a series of handshakes between foreign and domestic enterprises to develop real estate projects. And 2025 is the time to realize this relationship.

2025 is a year full of expectations for Southern real estate when foreign investment capital is officially disbursed.

The invasion of foreign brands

According to real estate consulting firm CRBE, 2024 is a "great victory" year for the Vietnamese real estate market in general and the Southern market in particular, going against the global trend by attracting a large amount of foreign investment capital. In the first 11 months of 2024, the real estate sector ranked second in attracting foreign investment, with nearly 5.63 billion USD, accounting for approximately 18% of the total registered investment capital (the same period in 2023 was only at 5.2%).

Specifically, CBRE cited the $982 million deal in which a group of companies based in Vietnam acquired 55% of the shares of SDI Investment and Trade Development Company. Next was the deal in which Sycamore Limited, a subsidiary of CapitaLand Group (Singapore), bought a housing project from Becamex IDC.

Established in 2021, TT Capital Investment Joint Stock Company has successfully joined hands to attract 150 million USD from the joint venture Consmos Initia (Japan). According to this cooperation, 150 million USD will be invested in TT Capital to develop luxury apartment projects in the southern provinces. The first project is 2,000 apartments named TT Avio in Di An City, Binh Duong Province; followed by other projects in the following years.

Kim Oanh Group has signed with 4 leading Japanese partners, including Sumitomo Forestry, Kumagai Gumi, NTT, AEON Vietnam, to invest in a 50-hectare project in Binh Duong called The One World with a total investment capital of more than 1 billion USD, of which the capital contributed by the 4 enterprises is 350 million USD.

Another successful handshake was recorded when Frasers (Singapore) cooperated with Kim Oanh Group to develop a 27-hectare housing project in Binh Duong New City. In addition, there were other deals such as Nha Khang Dien attracting capital from Keppel Land (Singapore) into a real estate project in Thu Duc City, Ho Chi Minh City; Phuc Khang received a handshake with a Japanese enterprise in a project to be implemented in Thu Duc City in 2025...

Mr. Keisuke Muraoka, representative of the Cosmos Initia joint venture (Japan), said that for foreign investors, participating in the Vietnamese real estate market is very difficult. Therefore, choosing a business and project to cooperate with is something that is carefully considered from many perspectives. In particular, in real estate projects, the most important factor is the ability to attract buyers who really want to live in the project. Even when legal procedures are completed, the project will still not be successful if it does not meet the living needs of customers.

“In addition to ensuring legal progress, we pay special attention to factors such as location, amenities and living environment around the project. For partners, we look for units with a lot of experience in housing development and reputation in the market. Only then can the handshake be successful in reality, not just in the signed contract,” said Mr. Keisuke Muraoka.

Foreign capital flow is the expectation of 2025

According to market observers, the flow of foreign investment into real estate is changing. Specifically, foreign enterprises investing in the market are all targeting affordable housing products, not high-end products. This is a positive signal, helping to resolve the imbalance between supply and demand in the market, when the entire market is lacking affordable housing projects.

Besides, the development direction of foreign capital is no longer focused on the Ho Chi Minh City market, but has spread to neighboring provinces.

Mr. Keisuke Muraoka said that with more than 50 years of experience in real estate development, Cosmos Initia aims to research the real estate market in the provinces surrounding Ho Chi Minh City through the first project TT Avio and plans to focus on the central area of ​​Ho Chi Minh City - where this joint venture expects continuous urban development in the following years.

The trend of foreign partners today is to look at real products, because these product lines when developed and sold will have a better and faster consumption margin than high-end lines. The capital invested is also lower, the profit margin is faster.

- Ms. Dang Thi Kim Oanh, Chairwoman of the Board of Directors, General Director of Kim Oanh Group

Cosmos Initia also oversees key aspects of the project to ensure that the final product meets customer expectations for quality and comfort. “The product line we are targeting is mid-range products, around VND2 billion/product. This is a product line that the market is lacking and has a huge demand for,” said Mr. Keisuke Muraoka.

According to Ms. Dang Thi Kim Oanh, Chairwoman of the Board of Directors and General Director of Kim Oanh Group, partners from Japan and Singapore agreed to join hands with Kim Oanh Group because the projects that the enterprise develops are all social housing and mid-range housing products.

According to Ms. Oanh, Kim Oanh Group chose to cooperate with Japanese corporations because they are professional, transparent, disciplined and have hundreds of years of experience in the real estate market. Cooperating with these partners, businesses learn how to implement quality instead of quantity. They also bring world-leading planning solutions that are combined with local culture.

The difficulty in cooperating with Japanese partners (not 1 but 4 partners is even more difficult) is that they require a lot of detailed work, requirements that the Vietnamese market does not yet have. Kim Oanh Group had to take a step back to get this cooperation. They chose a prime location, clear legal status, investors will pay according to legal progress and businesses must accept this.

“The contract is very strict, if the progress is not met, there will be a penalty. There are many strict terms, but we can proudly say that we have reached the final stage of the cooperation deal, the legal progress is almost completed. In addition to this cooperation deal, we have many projects that we hope to cooperate with investors on a win-win basis,” said Ms. Kim Oanh.

Mr. Lee Leong Seng, Director of Residential Property Development, Real Estate Division, Keppel Vietnam, said that foreign investors now prioritize projects with clear legal status and are ready for development. The real estate industry faces a number of legal and financial barriers, making entering the market through mergers and acquisitions (M&A) more effective than investing directly in new projects.

At the same time, with careful observation of the market, foreign enterprises see a new direction: affordable housing around Ho Chi Minh City. The demand for housing in these areas is very large and the margin of "sure win" is higher.

According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, the strong flow of foreign investment into the southern real estate market in 2024 shows the attractiveness of the market. The reasons given are that with strong population and urbanization, investors see demand exceeding supply in most key segments such as industry and logistics, housing, offices and retail.

According to Mr. Chau, 2025 will be a year full of expectations for the Southern real estate market when the cooperation between Vietnamese and foreign enterprises is officially realized. The trend of joint ventures and cooperation with foreign investors towards long-term and sustainable development is a smart choice for Vietnamese enterprises that not all enterprises can do.

In particular, 2025 will see many more deals with foreign investors pouring capital into Southern real estate. Large enterprises such as Hung Thinh, Novaland, Phat Dat, TTC Land... are negotiating with foreign enterprises and may announce deals in 2025.

Source: https://baodautu.vn/batdongsan/thi-truong-bat-dong-san-nam-2025-thoi-diem-nha-dau-tu-ngoai-hien-thuc-hoa-cam-ket-d237637.html