Dubai property developers eye opportunities

By Robert Ditcham, Staff Reporter
Published: September 02, 2007, 23:30

Dubai: Representatives from some of Dubai's top property developers will be part of the UAE's delegation to Vietnam this week to investigate opportunities in the South East Asian property market's answer to Dubai.

According to Rob McKellar, CEO at Savills Asia Pacific, Vietnam's emerging real estate market is considered the most exiting in Asia, with foreign direct investment expected to exceed $13 billion in 2007.

Dubai's investment into the country has been limited in comparison to its GCC neighbours. However, Dubai World made a firm commitment to the country with port operator DP World's $200 million investment in a container port outside Ho Chi Minh City (HCMC).

When contacted by Gulf News, Dubai's leading property firms gave no confirmation about their potential interest in the country. But Dubai World chairman Sultan Ahmad Bin Sulayem, who will be part of the UAE delegation, recently told the Reuters news agency that Vietnam could be a target for newly-formed Nakheel International, which was launched to pursue projects outside Dubai.

Speaking to Reuters, he said: "We like the market in Singapore and we're evaluating opportunities here. We are looking at China, Vietnam, Thailand."

According to Savills, investment into Vietnam has so far originated from countries closer to home, such as Korea, Japan, Taiwan and Singapore, who are attracted to high forecasted demand for new housing.

Real estate service provider CB Richard Ellis (CBRE) says 103 million square metres of housing will be needed in HCMC by 2010, according to the city's plans, while capital Hanoi also suffers from under-supply of housing.

CBRE says foreigners can purchase property in Vietnam, however only on a 50-year leasehold basis. But it says the freehold property market could soon be opened to foreigners, pending approval from the Vietnamese government. Those eligible are foreign investors/companies, those who have significantly contributed to the development of Vietnam, such as scientists, cultural specialists, academics, and spouses of Vietnamese nationals who have been in the country for one uninterrupted year.

CBRE says the law will be piloted in Hanoi and HCMC for a three- to five-year period. It called the move a step in the right direction, but said it remains "restrictive".

"It does not address the vast opportunities in Vietnam for the holiday home, second home and retirement markets, especially in the coastal regions where it would bring employment opportunities and FDI," the company said in a report.

However, investment opportunities in the country are not limited to the residential market. According to CBRE, the outlook for the retail market in HCMC remains positive. The company says the market is still under- developed and has attracted interest from many foreign supermarket and retailers. It adds that Vietnam is full of young consumers, with 65 per cent of Vietnam's population below the age of 35.

In Hanoi, there are seven retail projects under construction, which will provide approximately 260,000 square metres during 2007 to 2010.

Vietnam's tourist industry is also healthy, which will be of interest to Dubai-based companies looking to invest in international resorts and hotels.

According to the Vietnamese department of tourism, HCMC needs another 10,000 rooms across all grades in the next five years to accommodate the growing tourism and business travellers.

Increasing tourist arrivals and limited future supply of three- to five-star hotels will also improve the hotel market in Hanoi in terms of price and occupancy, says CBRE