Foreign investors silently buy real estate projects even when difficult economics

2012/08/08

In difficult market situation, foreign investors still invest more for making their profits after economics recovery SP Setia Real Estate Corporation (Malaysian company): It cooperated with Becamex Binh Duong in the Ecolakes project and owned EcoXuan project. Now, according to its director, Mr. Saw Kim Suan, said that his company have been investing real estate area basing on the potiential development of Vietnam even though VN is on the process of recession. He also stated Wise Investors must know to wait Some project consultants in district 3 also revealed that they have been consulting the last step for Japanese investors about some projects in dis. 1. Most of projects are in the central district which satisfy difficult requirements of Japanese company. Viet Hung Co., and KRDF 03 (Joint venture between Vietnam and Korea): Mr. Sang Hun Oh also stated that his company have looked for some real estate projects now. They guest that these assets will be valued highly whereas they only invest small amount of money at the present.

Advantages for investors: reduce the interest rate and ease the procurement for lending
According to Collier International study, although FDI into Vietnam in the first 6 months is 6.38 billion USD, less than 25% of the same period last year, FDI in real estate accounts for 1.5 bil USD (25% of total FDI) Source: VNExpress (http://vnexpress.net/gl/kinh-doanh/batdong-san/2012/08/nha-dau-tu-ngoai-am-tham-san-bat-dong-san-

Vietnam Macro-economics in July, 2012

According to Cafeland 2012 monthly report, Main points: 1. GDP
07/2012 01-07/2012

2012/08/08

Expected rate

GDP

4.66%

4.38%

6-6.5%

HSBC released PMI in July, 2012 is 43.6 whereas this rate in June, 2012 is 46.6% -> manufacturing sector is reducing. Increasing amount of inventory, lack of demand -> More and more difficult economics situation. 2. Investment in public sector Increasing: June, 2012 with 4.3%, July with 5.4% Purposes of increasing investment in public sector: Stimulate demand and revive the economy 3. FDI in real sector Total registered FDI: 8.03bil USD (-33.1% at the same period of last year) Disbursement FDI: 6.3bil USD (-0.8%) FDI in real estate: 1.6bil USD (25% of total disbursement FDI) -> Investors silently invest in the recession period, then, make profit after recovery. 4. CPI in 07/2012: + Decrease 0.29% of last month + Only increase 2.22% in comparison with the beginning month of 2012 + Increasing 5.35% of the same period of 2011. Interest rate: Government issued some financial policies to facilitate enterprises to access capital source. Interest rate: 10-15% (according to 14/2012/TT-NHNN Circular)