Challenging the Status of “The World’s Factory” | Sharp Surge in FDI Influx

In the last couple of years during the pandemic, many international corporates have moved their manufacturing bases to Vietnam in an attempt to diversify their risks, the Foreign Direct Investment (FDI) of Vietnam has increased exponentially, recording an impressive USD$10.8 billion net FDI amount in just the first four months of 2022, which is equivalent to an 88.3% year-on-year growth. Within Vietnam, the processing and manufacturing industry has gained the crown with the largest amount of investment summing up to USD$6.2 billion, which translates to 57.2% of the grand total of FDI received. The second place goes to the real estate industry, with USD$2.8 billion invested which is 26.1% of the total investment.

Multinational giants like Apple, Samsung, LG and Microsoft have been continuously expanding their manufacturing bases in Vietnam that have led to the rise of the middle-class population, while Vietnam has also become the city with the highest growth in the number of UHNWI. In 2021, there are 1,234 people with a net worth of USD$30 million or more, and there are 72,135 with assets accumulating to over a hundred million USD, it is estimated that the number of UHNWI is increasing at an annual rate of 26%, meaning that there will be a millionaire in every 850 people in Vietnam in just 4 years.

Mr Ronald Tay, the spokesman of CapitaLand Development (Vietnam), comments, “The next 5-year Plan of HCMC has an average growth target of 8% in Gross Regional Product (GRDP) from 2020 to 2025, with a projected per capita income of USD$8,500 to USD$9,000 per year in 2025. The increase in the middle-class population has led to an increase in the demand for high-quality residential properties. This is evident in how all the units in D1MENSION, a subsidiary of the group, were sold out within a short period of time after the sale. Among the units sold, Asia Bankers Club, Golden Emperor and Ashton Hawks have sold a lot of units in Hong Kong. In addition, the group held a priority preview of Zenity in Ho Chi Minh City earlier, attracting more than 400 interested buyers to participate. It is expected that the property will be sold out again quickly after the official launch.”

Mr Kingston Lai, the CEO of Asia Bankers Club, adds,” In recent years, the supply of new housing in HCMC has been lacking, and some areas have even experienced a shortage of land. Last year, a piece of land in Thu Thiem, a new development area in District 2, attracted fierce competition at auction and was finally sold at a sky-high price of US$100,000 per square meter. In the past, only District 1 would have recorded a land price of more than USD$100,000 per square metre. It shows that the high land price is spreading across the other districts while the prices in District 1 are foreseen to see new heights.”

The Scarce Supply of New Residential Project in District 1 City Centre

With the climb of land prices, property prices are deemed to follow – coupled with the limited supply of new housing, they have all contributed to the skyrocketing property prices in HCMC. Mr Ivan Yam, Managing Director & Partner of Golden Emperor says, “As of the third quarter of 2021, the supply of strata housing in Ho Chi Minh City plunged 70% year-on-year to 3,000 units, the lowest level in the past five years, driving up the city’s property prices by 8.2%. In fact, property prices in general areas of HCMC have doubled in the past 3 to 5 years, from an average of US$1,000 per square metre to over US$2,000 per square metre. Property prices in the Financial District have risen even more dramatically, with new properties selling for as much as US$7,000 per square metre.”