Vietnam, foreign investors here to grab realty opportunities: Knight Frank

By Thuy Tuong
Mon, February 27, 2023 | 2:17 pm GMT+7

Vietnam’s ailing real estate market still offers opportunities for investors to tap, said Alex Crane, Knight Frank Vietnam's managing director.

Crane highlighted this at a recent business briefing held by the Canadian Chamber of Commerce, in which the property services firm presented its predictions for the property market in 2023.

"At present, if an investor is liquid and able, it is a good time to be making moves in the commercial property industry. Both local and foreign investors are in the market and looking for opportunities right now," he told the event.

With a tumultuous 2022 in the rear-view mirror, following high-profile issues that suspended major projects, and in some cases, led even to prosecutions, all eyes are on the property sector for this year.

Despite woes in the Vietnamese real estate market and global economic headwinds, Crane said he saw opportunities from property developers’ shake-up that has followed the turbulence of 2022.

"Last year certainly saw quite a lot of reputational damage incurred to local property developers, but we already saw 'bubbles of activity' early this year.” He remained optimistic about Vietnam's overall industrial property sector, but did caution that the 30% increase in construction costs means it is "getting expensive".

Knight Frank Vietnam managing director Alex Crane (middle) speaks at the Canadian Chamber of Commerce business briefing in Ho Chi Minh City in mid-February. Photo courtesy of Knight Frank.

Knight Frank Vietnam managing director Alex Crane (middle) speaks at the Canadian Chamber of Commerce business briefing in Ho Chi Minh City in mid-February. Photo courtesy of Knight Frank.

He noted that Vietnam is now essentially on par with the Philippines in terms of the cost base for the manufacturing sector when including labor, which is one of the key backbones of Vietnam's overall economy.

The Knight Frank executive added the domestic realty market could expect an increase in supply, which will put pressure on land prices and rents in the year ahead. New supply would arrive from new developments but also with the reopening of 'gray space' being those factories that have capacity following either closures or reduction of output or hours through last year. These will likely be the first to come back online in certain industries before new leases are taken in new projects.

Citing a Knight Frank report from late in 2022, he mentioned a huge opportunity for tenants this year. Describing a shift from "owner favorable" to "occupier favorable", Crane recommended that enterprises in offices and warehouses should speak with brokers about future terms and future rates, with a 23% increase in Grade A and B office inventory set to hit the market in the next 12-24 months - set to bring average Grade A rental rates down by around 5%, and Grade B rates down by around 18%.

"For both industrial and office occupiers, 2023 will be an excellent time to speak to your advisors," said Crane. "For manufacturers looking at new facilities are heading into the buyer's market; and for multinationals and large organizations, the office market here is also beginning swing favorably for them."

Knight Frank welcomed further regulatory intervention from Vietnamese regulators in areas covering taxation, asset liquidation, lending policies, and bond markets to prevent future recurrences of several of the issues that arose in the second half of last year or so.

"Much has been discussed of late around the bond market, and there is certainly potential for major legislation around the liquidation of distressed assets that could go some way toward alleviating the pressure on bonds this year. The government could also look to more stringent regulation around borrowing and repayment for developers," Crane said.

He praised Vietnam’s plans for a second property tax, which he described as a "net positive all round" for the property sector.

He concluded by highlighting this year as an opportunity for a broad improvement in across-the-board standards for the commercial property sector, remarking that "quality is king" and talking about ways in which this year will be defined by a higher quality of development, higher standards of governance, and a continued increase in the focus on sustainability and green-accreditation for the new inventory that is coming on line both this year and 2024.

Comments (0)
  • Read More
Vietnam steel major SMC remains bogged down with difficulties

Vietnam steel major SMC remains bogged down with difficulties

Steel manufacturer SMC Trading Investment JSC has been actively selling assets to generate cash for debt repayment and maintain operations since the beginning of this year.

Companies - Thu, October 31, 2024 | 10:41 am GMT+7

Vinhomes’ earnings fall 39% to $777 mln in Jan-Sep

Vinhomes’ earnings fall 39% to $777 mln in Jan-Sep

Vinhomes, the largest residential housing developer in Vietnam, booked a net profit of VND19,642 billion ($777 million) in the first three quarters this year, down 39.2% year-on-year.

Companies - Thu, October 31, 2024 | 9:58 am GMT+7

AI cannot replace customer service staff: MoMo exec

AI cannot replace customer service staff: MoMo exec

AI cannot replace customer service staff, but it can give them more time to prepare and provide better care for customers, says Thai Tri Hung, senior deputy general director and chief technology officer of e-wallet app MoMo.

Companies - Thu, October 31, 2024 | 8:11 am GMT+7

Vietnam property developer Novaland posts skyrocketing Q3 profit

Vietnam property developer Novaland posts skyrocketing Q3 profit

Novaland, a leading real estate developer in Vietnam, reported its after-tax profit hit VND2.95 trillion ($166.62 million) in the third quarter of this year, a 21.6-fold rise year-on-year.

Companies - Wed, October 30, 2024 | 10:59 pm GMT+7

Thailand fruit prices increase at the end of successful season

Thailand fruit prices increase at the end of successful season

Thailand’s fruit season is wrapping up this year with a notable surge in prices for durian, mangosteen, rambutan, longkong, and mango.

Southeast Asia - Wed, October 30, 2024 | 10:30 pm GMT+7

BlackBerry launches regional cybersecurity headquarters in Malaysia

BlackBerry launches regional cybersecurity headquarters in Malaysia

Canada-based BlackBerry Ltd has established an Asia Pacific regional headquarters for its cybersecurity division in Cyberjaya, Malaysia, which is now fully operational.

Southeast Asia - Wed, October 30, 2024 | 10:27 pm GMT+7

Malaysia faces rising cybersecurity threats

Malaysia faces rising cybersecurity threats

Malaysian users are facing a high level of cyber threats, which may coincide with the rapid expansion of data centers in the country.

Southeast Asia - Wed, October 30, 2024 | 10:24 pm GMT+7

Indonesia to develop 3 million more hectares of rice fields

Indonesia to develop 3 million more hectares of rice fields

The Indonesian government is working to implement a program to develop 3 million hectares of new rice fields to strengthen the country's food resilience amid global challenges and increasing population demands, national news agency Antara reported.

Southeast Asia - Wed, October 30, 2024 | 9:24 pm GMT+7

Singapore’s digital economy thriving

Singapore’s digital economy thriving

Singapore’s digital economy accounted for 17.7% of the island state's GDP in 2023, up from 17.3% in the previous year, according to its Infocomm Media Development Authority (IMDA).

Southeast Asia - Wed, October 30, 2024 | 9:21 pm GMT+7

Viettel, UAE’s Presight to boost Applied AI, digital transformation in Vietnam

Viettel, UAE’s Presight to boost Applied AI, digital transformation in Vietnam

Vietnam’s Viettel AI and the UAE’s Presight have agreed to jointly advance the development of Applied AI and digital transformation initiatives in Vietnam.

Companies - Wed, October 30, 2024 | 8:30 pm GMT+7

Vietnam utility EVN to build $277 mln transmission line to import power from China

Vietnam utility EVN to build $277 mln transmission line to import power from China

State utility Vietnam Electricity (EVN) has got the go head to build the VND7,010 billion ($277.2 million), 500 kV Lao Cai-Vinh Yen line for transmission in the northwestern region and to import power from China.

Energy - Wed, October 30, 2024 | 8:09 pm GMT+7

Jack Ma-invested fund unloads Vietnam holdings worth $130 mln in Q3

Jack Ma-invested fund unloads Vietnam holdings worth $130 mln in Q3

China’s Tianhong Vietnam Market Stock Initiated Securities Investment Fund (QDII) saw outflows of around RMB930 million ($130.4 million) in the July-September quarter.

Finance - Wed, October 30, 2024 | 4:53 pm GMT+7

Private lender HDBank reports strong profit growth in 9 months

Private lender HDBank reports strong profit growth in 9 months

Ho Chi Minh City-based private creditor HDBank's pre-tax profit surged 47% year-on-year to VND12.65 trillion ($499.6 million) in the first nine months of this year.

Banking - Wed, October 30, 2024 | 4:42 pm GMT+7

Real estate M&As gather pace as local firms struggle with capital insufficiency, restructuring: experts

Real estate M&As gather pace as local firms struggle with capital insufficiency, restructuring: experts

2024 is considered a vibrant year for mergers and acquisitions (M&A) in Vietnam’s real estate sector, as domestic property companies still face challenges related to capital and restructuring, according to experts.

Real Estate - Wed, October 30, 2024 | 4:14 pm GMT+7

Vietnam conglomerate Vingroup, UAE partner seek to build $3.5 bln data center

Vietnam conglomerate Vingroup, UAE partner seek to build $3.5 bln data center

Vietnam’s leading conglomerate Vingroup and the Middle East-focused Benya Technologies will jointly explore opportunities to invest in a $3.5 billion data center in Vietnam.

Industries - Wed, October 30, 2024 | 3:43 pm GMT+7

Commonwealth Bank of Australia further sells 10% stake in Vietnam bank VIB

Commonwealth Bank of Australia further sells 10% stake in Vietnam bank VIB

The Commonwealth Bank of Australia (CBA) has sold a further 10% stake in Vietnam International Commercial Joint Stock Bank (VIB).

Banking - Wed, October 30, 2024 | 1:17 pm GMT+7