But with 33 cars and 1,230 motorbikes registered everyday, Limitless calls for strategic approach to supporting infrastructure during Cityscape Asia
Record 2007 Foreign Direct Investment (FDI) worth US$ 20.3 billion is driving Vietnam’s real estate industry but experts have urged existing and would be investors and developers to take an holistic approach and support local and regional infrastructure requirements.
The cautionary advice came during keynote presentations at the Cityscape Asia conference, which closed yesterday (Thursday 17 April). The three-day event which took place at the Suntec Singapore International Convention & Exhibition Centre, played host to 6,000 industry professionals and is part of the largest B2B real estate event brand in the world.
During his presentation entitled, ‘Where to Invest and What to Build in Vietnam’ Philip Atkinson, Regional Director of Dubai-based Limitless, who broke ground last December on their US$220 Million Halong Star project, located on Vietnam’s N.E. coast, called for investors and developers to pursue an all-embracing strategy.
“Give Vietnam what it needs, responsible investment, affordable high quality environments providing a solid base for sustainable growth,” urged Atkinson. “Although demand will continue to out-pace supply in almost every sector, supporting infrastructure is critical. This includes hard and soft infrastructure such as schools, hospitals, roads, trains, airports, communications and power stations.”
Atkinson continued, “The decision to invest in a particular sector or geographical area in Vietnam remains subject to the standard due diligence and feasibility that any investment opportunity requires. The lesson for today is to look beyond the boundary of the site being considered and appreciate the bigger picture. Ultimately the bigger picture bears a greater influence on the viability of any project.”
Some major Infrastructure projects are underway throughout Vietnam and in Ho Chi Minh City (HCMC) such as the Thu Theim bridge, 4 new ring roads, the new Metro project and a 19.7 kilometre subway, but massive investment still needs to be made.
However, with the sub prime issues in the US and other parts of Western Europe and saturation of other more mature property markets in S.E. Asia, Vietnam still remains a lucrative proposition. With GDP growth of averaging 8% annually, Vietnam is home to some 85 million people, 45 million of whom are under 35 years of age. So with the ensuing urbanisation, demand for residential and commercial space is continuing to outstrip supply. That supply and demand imbalance is now stoking inflation (currently running at 15.8%) from skyrocketing real estate prices (The rental cost of a three-bedroom apartment in HCMC is now tenth highest in the world).
But foreign investment continues unabated. Vietnam currently attracts more overseas investment than India. In 2005 FDI was recorded at US$ 5.8 billion, a year later it reached US$ 10.2 billion and in 2007 it virtually doubled to US$ 20.3 billion. Indeed over the last 20 years Vietnam has amassed US$ 98 billion in FDI for over 9,500 projects.
“It is interesting to note that over 60 per cent of Vietnam’s FDI originates from within the region, from countries such as Korea, Singapore, Malaysia and Japan,” said Graham Wood, Exhibition Director, Cityscape Asia.
Naturally this has spurred major development projects but if infrastructure issues are not addressed early on in the development cycle, projects could be delayed or worse still assets may not appreciate their full potential.
“It is in the stakeholders’ interests to ensure adequate infrastructure is in place, the better that is the more attractive the proposition. You don’t save a cent to lose a dollar,” commented Wood.
Other eminent speakers echoing Atkinson’s sentiment on Vietnam included Marc Townsend, MD of consultants, CB Richard Ellis – Vietnam; Truong Trong Nghia, President of the Vietnamese Investment & Trade Promotion Center and Do Thi Loan, General Secretary of Ho Chi Minh City Real Estate Association.
-ENDS-
Photo caption: “Give Vietnam what it needs, responsible investment, affordable high quality environments providing a solid base for sustainable growth,” – Philip Atkinson, Regional Director of Limitless.
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