Real estate sector sees sharp drop in FDI

The Vietnamese real estate sector has become less attractive to foreign investors, as the country witnessed a sharp drop in foreign direct investment (FDI) between January and July.

The Vietnamese real estate sector has become less attractive to foreign investors

According to the General Statistics Office, Vietnam attracted a total registered FDI of USD305.26 million in the real estate sector in the first seven months of this year, accounting for 3% of the country’s total FDI, compared with 23% in the same period of 2010.
Of the sum, USD275.26 million was accounted for by nine newly-licensed projects with the remainder being additional capital for two existing projects.
The Foreign Investment Agency under the Ministry of Planning and Investment said FDI flows have strongly moved into the manufacturing industry. Between January and July, Vietnam pulled in a total registered FDI of USD4.25 billion in this sector, making up 47% of the nation’s January-July FDI capital, compared to just 29% of the same phase of last year.
Phan Huu Thang, Director of the Centre for Foreign Investment Studies, was cited by VnEconomy as saying that the period marked the lowest level of FDI into the Vietnamese real estate sector for the past five years.
Real estate analyst Savills Vietnam said that the situation was caused by the negative impact of the global economic slowdown; which had seen foreign investors reducing their investments in Vietnam to minimize risks. Instead, they were focusing on their domestic markets.
The Vietnamese property market continues on a downward trend. Meanwhile, the high-end apartment segment, currently dominated by foreign investors, has reached saturation point, further discouraging investment.
Singaporean foreign investors lead real estate investment in Vietnam as they continue to benefit from government support, including Keppel, Sembcorp and Mapletree and big names like CapitaLand.
In the first seven months of this year, Vietnam attracted total registered FDI of USD9.04 billion. Foreign investors disbursed USD6.3 billion of FDI during the period.

Hong Kong was the biggest foreign investor in Vietnam, followed by Singapore, South Korea and Japan.