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The Third Real Estate Investment Waves

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At the end of August, Anpha Holdings (Vietnam) co-operated with international real estate company PropNex International Singapore to introduce the Star Residences Two project in Malaysia to local investors. This is a 58-storey project of 482 apartments covering 68-120 square meters in Kuala Lumpur. The project is being developed by Malaysia's UMLand and Symphony Life, which sells for $ 5,700-6,800 per square meter.

Right after Star Residences Two, Anpha Holdings will continue to introduce three other Singapore projects, Wallich Residence, Sims Urban Oasis and Leedon Residence in late September. All are developed by GuocoLand Limited. Representatives of Alpha Holdings also said they would introduce real estate projects in Australia to domestic investors in November this year.

Malaysia is the second Southeast Asian country after Singapore to invite Vietnamese investors. Prior to that, the program inviting real estate investment in the US, Australia was launched quite loudly. Real estate in Australia is attractive to domestic investors thanks to low interest rates, preferential tax policy, high rent demand, stable political and economic environment, favorable for both real estate investment Live and trade. Real estate companies such as Iron Fish look to Vietnam after the Australian government tries to curb the influx of Australian property from the wealthy Chinese.

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Notably, to facilitate Vietnamese investors, many Australian banks also provide loans up to 70% of real estate value, with interest rates around 4% per annum. According to Iron Fish representatives, Australian real estate can bring annual returns of 10-20% of total value.

In fact, the profitability of Australian or Malaysian real estate is not an attraction for domestic investors, but for enjoying the benefits of indigenous people, living environment and especially children. They enjoy the advanced education programs of the aforementioned countries. Ironfish's representative said that a group of customers from Vietnam, mostly HCM City, bought Australian property mainly for children to use when studying abroad, or sublet.

This trend has been around for at least five years. According to the American Institute for Migration Policy, by 2009 families in Vietnam sent more than 100,000 students to study in 50 countries. By 2010, the countries with the highest number of Vietnamese students were Australia (25,000), China (13,000), the United States (12,000), Singapore (7,000), Britain (6,000), France (5,000), Russia (5,000) and Japan (3,000).

In particular, Australia and the United States, though expensive, attracted many Vietnamese students. According to the Institute of International Education, in the period 2000-2014, the proportion of Vietnamese students in US institutions has increased by 700%.

In general, this trend has not affected the real estate market in the country. Representatives of Him Lam Company commented: "Only super-rich groups in Vietnam are target customers of foreign real estate companies because they buy children to study or do business. This group does not represent the majority of customers today, so the real estate market in the country is not much affected.

By the same point, Le Hoang Chau, Chairman of the HCM City Real Estate Association, said that Singapore is a country chosen by the rich people of Vietnam as the second home for good living environment and education system; However, this number is not much so it does not affect the market.

In countries like the US, the price of many places is equivalent to high-end apartments in the central district in Vietnam, but the real estate market in the country has come into stable, investment interest is not much just some thousands of dollars only, so the main purpose when they buy is to live; and this gourp, according to Chau is not much.

According to a financial specialist in Ho Chi Minh City (not wanting to name), this is a wave of foreign real estate investors flooding into Vietnam. The first wave began in the years 2000-2007, when many Vietnamese were rich thanks to the stock market has been looking for real estate in countries such as the United States and Canada. The second wave, which began in 2008-2010, when domestic banks loosened home loans, formed a surge in real estate investment in countries such as Australia and Singapore.

"The third wave came from Southeast Asian countries and focused on the emerging middle class in Vietnam, the financial capacity of this group was less than the previous groups but still desirable for their children to study and settle in oversea" he said.

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According to information from globalpropertyguide.com, Maylaysia's average home price for the third quarter of 2015 is over $ 72,000. This price, according to the aforementioned website, is much lower than real estate in Australia. As of September 2015, average house prices in Australia amount to more than $ 400,000 per unit. Sydney is the city with the highest average price, more than $ 500,000 / unit. The "soft" price is in the state of Tasmania, average $ 225,356 / unit.

However, The Economist said that Australian real estate is being priced up to 30% of real value, due to massive influx of Chinese investors over the past few years and could fall down in future. In the United States, the average price of an apartment as of April 4.2016, according to the Census Bureau, is about $ 290,000 per unit (land price included).

Meanwhile, according to the Institute of American Migration Policy, the trend of migration of the Vietnamese will continue in the future. Accordingly, free trade agreements, the pace of urbanization, economic development and climate change will affect the migration of Vietnamese to some extent.

For example, agreements such as the Transpacific Partnership Agreement (TPP), the ASEAN Economic Community (AEC) or the Comprehensive Economic Partnership Agreement (RCEP) will undoubtedly affect the Vietnamese migration trend. Even if the US immigration policy institute affirms that if these trade agreements do not change the rules on immigration between member countries, the economic effects of increased trade will directly affect the migration of people between countries.

Source: Bridge Investment