In Q2/2024, the real estate market in Vietnam witnessed several prominent mergers and acquisitions (M&A) deals. Notably, Kim Oanh Group partnered with NTT Urban Development, Sumitomo Forestry, and Kumagai Gumi Co. Ltd (Japan) to develop The One World project. Additionally, Nishi Nippon Railroad (Japan) acquired a 25% stake in the 45.5-hectare Paragon Dai Phuoc project from Nam Long Group.
New Projects and M&A Capital Flow
According to experts from Savills, the residential real estate market is progressing cautiously. In the context of economic fluctuations and potential buyers adopting a wait-and-see attitude, developers continue to launch new projects to gauge market sentiment. For example, Masterise Homes introduced a 7.2-hectare residential project in Hai Phong, while Ecopark launched a 1.3-hectare project in Nghe An. In Ho Chi Minh City, Gamuda launched The Meadow project, featuring 212 townhouses in Q2/2024.
Simultaneously, Vinhomes partnered with Nomura from Japan to co-develop two subdivisions within the Vinhomes Royal Island project, offering 821 low-rise units. In the resort segment, VCRE launched 264 luxury apartments in Da Nang in collaboration with the renowned Nobu Hospitality brand. Japanese capital is particularly prominent, with share transfers in residential projects in Dong Nai and Binh Duong.
In the commercial real estate segment, rising rental prices and limited space are pushing businesses to relocate outside of city centers. Hanoi is expected to see 48% of new office space located in emerging CBD areas like West Lake by 2025, while Ho Chi Minh City is witnessing a shift towards Thu Thiem, with new green-certified developments.
Stable Recovery of the Investment Environment
Overall, Savills' Q2/2024 APIQ report recorded a 4.0% increase in Vietnam's consumer price index during the first five months of 2024 compared to the same period last year. Standard Chartered Bank recently revised its forecast for Vietnam's GDP growth in 2024 to 5.3% in Q2, slightly down from 5.7% in Q1. While this indicates a slowdown, the overall recovery process remains on track. Challenges such as geopolitical tensions, global inflationary pressures, and low investment demand may extend into Q3, potentially impacting the recovery process.
Savills' Deputy Managing Director, Mr. Troy Griffiths, noted that economic challenges may persist in Q3, amid weak global demand, geopolitical tensions, and inflationary pressures. However, positive FDI and domestic infrastructure investment will drive the economy forward. Mr. Troy Griffiths highlighted that FDI disbursement in May increased by 7.8% year-over-year to USD 8.3 billion, a positive sign for the economy. The industrial real estate sector is expected to see stable demand, supported by FDI inflows and infrastructure development.
"This will encourage developers to expand their portfolios, such as VSIP, which is building a 600-hectare industrial park in Lang Son, and Gaw NP Industrial, which is introducing nearly 100,000 square meters of ready-built factories and warehouses in Ha Nam," said Mr. Troy Griffiths.
Optimistic Outlook for the Asia-Pacific Region in the Second Half of the Year
According to Savills, the Asia-Pacific region's real GDP growth forecast for 2024 has been revised up to 3.9%, driven by strong economic performance in India and a robust recovery in exports. However, the resilient U.S. economy has delayed the Fed's rate cut timeline, and monetary policies are expected to remain unchanged across most major markets. The higher interest rate environment is likely to persist until the end of the year, except in Japan and China. Investors remained cautious in Q2/2024, leading to a 28.1% year-over-year decline in preliminary investment volume, with total investment value dropping to USD 26.3 billion (considering transactions over USD 10 million, excluding development sites and pending deals).
The report also shows that within the region, the commercial real estate segment, including office, retail, and industrial/logistics, continued to lead investment volume in Q2/2024, accounting for over 75%. However, hotel investment doubled in Q2/2024, indicating a continued shift towards alternative assets that could offer potential investment returns. Looking ahead, the report forecasts a rate cut by the end of the year due to easing inflationary pressures and slowing economic growth, and the regional real estate market is expected to gradually recover in the coming quarters. However, the upcoming U.S. election and ongoing geopolitical tensions could affect the region's recovery process.
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