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CBRE Vietnam Real Estate Spotlight – W21 2018

Vietnam Is a Frontier Market for Good Reason, Bien Hoa Industrial Park to close, Vietnamese Techcombank to make listing debut on June 4 at $6.5b valuation, …


Vietnam Is a Frontier Market for Good Reason

There are growing calls for the Southeast Asian economy to be included in the MSCI Emerging Markets Index. And Vietnam has better liquidity than the Philippines, which is already there. But there are good reasons to keep Vietnam in frontier market territory. For one, its share market isn’t ready for active fund managers, who struggle to beat the benchmark. Large moves by a few companies can swing the broader market big-time. 5 companies (Bank for Foreign Trade, PetroVietnam, Vietnam Dairy, Vingroup, Vinhomes) currently contribute to more than 40% of the benchmark Ho Chi Minh Stock Index.  Last week, Vinhomes raised US$ 1.4 billion in the country’s largest IPO. After Vinhomes’ debut, Vingroup sold off, causing the broader index to dip. As a significant manufacturing hub, Vietnam has one of the best growth stories in Asia. But with a few companies able to distort the market, it’s no country for old-school investors.



Vietnam, with its low property prices, has become a new treasure hunting ground for Hong Kong and China buyers

With properties priced at a discount to those in neighbouring Singapore and Thailand, Vietnam is rapidly drawing Hong Kong and China investments its way and becoming a popular investment destination. Buyers from the mainland, Taiwan and Hong Kong last year accounted for 25% of the Southeast Asian nation’s total transactions by foreign buyers, up from 21% in 2016. Buyers with limited assets overseas are able to purchase properties in a rapidly growing market and diversify their investments. You can buy a 700,000 yuan (US$109,781) home in Vietnam with the money you have overseas, even if you can’t afford to buy a 5 million yuan home in Australia or the US. Chinese buyer demand for Vietnam properties in the first quarter of 2018 was more than 300% higher than the first quarter of 2017. The country is still lower on the preference list than Thailand or Malaysia, but demand is growing.



Bien Hoa Industrial Park to close

Dong Nai Province has been working with agencies on a project to turn Bien Hoa I Industrial Zone into a commercial and service centre. They gave approval for Sonadezi, an industrial zone development company, to implement the project. The total cost of the project is VND15 trillion ( US$ 658 million), including VNd2.4 trillion for construction and equipment, VND 7.5 trillion for compensation and clearance, and VND1.3 trillion for supporting businesses and labourers. Businesses in the industrial zone emit more than 9000m3 wastewater per day. Millions of people in Bien Hoa Province and southern provinces are affected by the polluted water from the Dong Nai River. In order to solve environment problems, by the end of 2022 the province would shut down Bien Hoa I Industrial Zone.



Daikin officially opens the air-conditioning factory in Vietnam

Daikin's first production facility in Vietnam covers an area of 28,000sm and is located in the area of 219,10sm, located in Thang Long II Industrial Zone, Hung Yen Province. Daikin Vietnam representative said the new plant is the key unit of the Group's strategy until 2020 to boost the growing air-conditioning business in Asia. It is expected that by 2020, Daikin Vietnam will employ 2,500 workers, build a network of sales and after-sales service throughout the country. In addition, businesses increase the number of agents from 750 to 2,000, the number of service centers from 8 to 25 locations, business offices from 5 to 10 locations.



Vietnamese Techcombank to make listing debut on June 4 at $6.5b valuation
Deal Street Asia

Techcombank plans to raise charter capital from VND11 trillion ($481 million) to VND35 trillion ($1.5 billion) after its listing debut on Ho Chi Minh City Stock Exchange (HoSE) on June 4. Shares are allowed to move 20 per cent higher or lower than the reference price on the first day of listing. At the price, the Hanoi-based bank was valued at VND149 trillion ($6.5 billion), ranked the second position in the market after Vietcombank at VND192 trillion ($8.4 billion. At this valuation, Techcombank’s capitalization is even greater than that of BIDV and Vietinbank, whose charter capital is three times higher in comparison. As planned, Techcombank plans to issue more than 2.3 million common shares with par value of VND10,000 apiece ($0.4) to increase charter capital. 



Hanoi to approve routes through Me Linh and Dong Anh

Ring road 3 and 5 through Me Linh and Dong Anh district have a length of about 9.1 km. The starting point is at the intersection of Thuong Cat Bridge and extended National Highway 5, the last point will be at the intersection with Ring Road 3 located at the north of the Red River. This is an urban-level road.



Hoa Lac Hi-tech park secures nearly 11 trillion VND in investment

Hoa Lac Hi-tech Park granted investment certificates to four projects worth nearly VND11 trillion (US$484 million) combined in the first four months 2018. The 4 projects will be carried out across 15.4 ha Currently, the park is home to 83 projects with total registered capital of US$3.4 billion. Hoa Lac Hi-tech Park is expected to become a model science space and a national hub for technology development and application. Core hi-tech fields in the park include information and technology, communication, electronics, biology, new materials and energies.



Go-Jek sets sights on Vietnam
The Jakatar Post

Go-Jek has confirmed that the company is eying an expansion to Vietnam but declined to reveal any details. Go-Jek would start operations in the country in July. Go-Jek is set to compete with Grab, which dominates the ride-hailing market in the country, and Singapore-based blockchain-powered ride-hailing app MV, which will reportedly also enter Vietnam in July. To attract Vietnamese drivers to join its service, Go-Jek will initially charge them no commission fee. 



Many debates await Congress on the special-zones law
Zing News

Having been expected to be submitted to the National Assembly for discussion at the 5th session, the special-zones law still has conflicting opinions on many issues, especially the model of government organization. After submitting to the National Assembly for the first time in the 4th session, over the past half year, there have been many conferences and seminars organized to get comments and suggestions for the draft law. To date, the draft law has made many adjustments, based on the acceptance of opinions of many gender, including the name change and adjustment of content.











Dung Duong MRICS


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An Nguyen

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Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market.