Great Wall of Money report from Cushman & Wakefield finds that real estate continues to attract its fair share of FDI.
Vietnam received over $66 billion in foreign direct investment (FDI) in the 2014-2016 period, with an average of 10 per cent going to the real estate sector, according to The Great Wall of Money report from Cushman & Wakefield.
FDI volumes have been increasing by $2 billion each year on average and 2016 finished with $26 billion. An average of 10 per cent finds its way into real estate investments annually, the report noted.
Mr. Ben Gray, Director of Capital Markets at Cushman & Wakefield Vietnam, said that the greater the pressure for managers to secure returns, the better placed the market is when compared to Asia-Pacific competition.
“Core & Core plus strategies include an element of ‘build to core’, which is a viable, rebranded way for managers to deliver returns while taking on additional risk not traditionally associated with vanilla investments,” he said.
Vietnam’s Core & Core plus assets are producing unleveraged returns that can match and exceed managers’ expectations, without the addition of development or financing risk. There are few markets where a Singaporean real estate investment trust company (REIT) could acquire a core mixed use asset worth approximately $480 billion, as happened in Vietnam last year.
Yields such as the above reinforce the message that long-term growth is projected and tangible. Vietnam has an uncongested development pipeline and more frequently from an investor’s perspectives has limited country and economic risk when compared to the regional competition.
2017 and into 2018 will continue to prove strong years for the sale and purchase of investment-grade assets.
Corporate ratings for 2017 announced by Vietnam Report showed that average revenue and after-tax profit for real estate investors in 2015 were VND649.5 trillion ($28.5 billion) and VND76.4 trillion ($3.36 billion), respectively, much higher than the averages for construction material companies and construction and real estate consultants and brokers.