Vietnam Real Estate Report Q3 2011
Includes 3 FREE quarterly updates
Vietnam’s commercial property market has suffered from an oversupply in all subsectors due to overconstruction. It is now also under pressure from economic uncertainty, a reduced fiscal budget, high inflation (the highest in the Asia Pacific in 2011), tighter credit and declining consumer confidence. Rents have been falling since 2008 across the board.
The Vietnamese government has transferred its economic focus – away from driving economic growth and towards fighting inflation and addressing macroeconomic imbalances – and this is beginning to cool the economy. Real GDP growth in Q111 was a relatively subdued 5.4% year-on-year (y-o-y), compared with 7.2% in Q410. We expect public spending cuts and tighter credit conditions to keep economic activity depressed over the next few months. Accordingly, our forecast for real GDP growth in FY11 is 6.3%.
In December 2010, the consumer price index (CPI) increased by 11.75% y-o-y. This means that the cost of construction, including materials and labour, is continually rising. On March 31 2011, Prime Minister Nguyen Tan Dung announced plans to slash the fiscal budget by 7.4% in 2011. The State Bank of Vietnam (SBV) increased interest rates in February and April, bringing the policy rate from 9.00% at the beginning of the year to 13.00%.
Access to financing is seen as the ‘most problematic factor for doing business’ in Vietnam, according to the World Economic Forum’s Global Competitiveness Report 2010-2011. The next most significant problems are inflation and policy instability. On the Jones Lang LaSalle Global Real Estate Transparency Index 2010, Vietnam is rated ‘low,’ and is ranked 76th lowest out of 81 countries surveyed for real estate transparency.
According to the Association of Foreign Investors in Real Estate (AFIRE), in their ‘Ranking of Emerging Countries Considered for Real Estate Acquisitions – 2011’, Vietnam is ranked fourth best, behind China, India and Brazil. However, many would dispute this assessment as over-optimistic.
Vietnam is considering setting up the legal framework for real estate investment funds, similar to real estate investment trusts (REITs) in other countries. However, there are still a number of legislative hurdles to be overcome before these can become law.
Vietnam’s commercial property market has suffered from an oversupply in all subsectors due to overconstruction. It is now also under pressure from economic uncertainty, a reduced fiscal budget, high inflation (the highest in the Asia Pacific in 2011), tighter credit and declining consumer confidence. Rents have been falling since 2008 across the board.
The Vietnamese government has transferred its economic focus – away from driving economic growth and towards fighting inflation and addressing macroeconomic imbalances – and this is beginning to cool the economy. Real GDP growth in Q111 was a relatively subdued 5.4% year-on-year (y-o-y), compared with 7.2% in Q410. We expect public spending cuts and tighter credit conditions to keep economic activity depressed over the next few months. Accordingly, our forecast for real GDP growth in FY11 is 6.3%.
In December 2010, the consumer price index (CPI) increased by 11.75% y-o-y. This means that the cost of construction, including materials and labour, is continually rising. On March 31 2011, Prime Minister Nguyen Tan Dung announced plans to slash the fiscal budget by 7.4% in 2011. The State Bank of Vietnam (SBV) increased interest rates in February and April, bringing the policy rate from 9.00% at the beginning of the year to 13.00%.
Access to financing is seen as the ‘most problematic factor for doing business’ in Vietnam, according to the World Economic Forum’s Global Competitiveness Report 2010-2011. The next most significant problems are inflation and policy instability. On the Jones Lang LaSalle Global Real Estate Transparency Index 2010, Vietnam is rated ‘low,’ and is ranked 76th lowest out of 81 countries surveyed for real estate transparency.
According to the Association of Foreign Investors in Real Estate (AFIRE), in their ‘Ranking of Emerging Countries Considered for Real Estate Acquisitions – 2011’, Vietnam is ranked fourth best, behind China, India and Brazil. However, many would dispute this assessment as over-optimistic.
Vietnam is considering setting up the legal framework for real estate investment funds, similar to real estate investment trusts (REITs) in other countries. However, there are still a number of legislative hurdles to be overcome before these can become law.
Contents
Executive SummarySWOT Analysis
Vietnam Real Estate/Construction SWOT
Vietnam Economics SWOT
Vietnam Business Environment SWOT
Real Estate Market Overview
Table: Vietnam’s Real Estate Market – Historic Rents, 2009 And 2010 (m2/month, US$)
Table: Vietnam’s Real Estate Market – Net Yields, 2010 And 2011 (%)
Table: Vietnam’s Real Estate Market – Terms Of Rental Contract/Lease, Mid-2010
Real Estate Market Analysis
Industry Forecast Scenario
Real Estate Outlook
Table: Vietnam’s Real Estate Market – Rentals, 2010-2012 (m²/month, US$)
Table: Vietnam’s Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Construction and Infrastructure Outlook
Table: Vietnam Construction And Infrastructure Industry Data
Table: Vietnam Construction And Infrastructure Industry Data
Construction and Infrastructure Forecast Scenario
Macroeconomic Outlook
Vietnam – Economic Activity
Business Environment
Real Estate/Construction Business Environment Ratings
Table: Asia Real Estate/Construction Business Environment Ratings
Vietnam’s RECBER
Project Finance Ratings: Outlook for Asia Pacific
Table: Design And Construction Rating
Table: Commissioning And Operating Rating
Table: Overall Project Finance Rating
Vietnam’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Annual FDI Inflows Into Asia, 2006-2008
Table: Vietnam Top Export Destinations, 2001-2008 (US$mn)
Table: Trade And Investment Ratings
Company Profiles
Becamex IDC Corp
COTECCONS Group
Housing And Urban Development Corp (HUD)
Nam Cuong
Song Da Construction Corporation
Vietnam Construction And Import-Export Corporation (Vinaconex)
Vietnam Construction And Machinery Installation Corporation (Lilama)
Vincom
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
Sources 69 Skip to top