Vietnam’s real estate crisis trajectory

Vietnam’s real estate crisis trajectory Danielle LABBE

Clément MUSIL IPRAUS

Montréal, 19/10/2013

Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory

Hanoi, Hoai Duc district, Splendora (Posco and Vinaconex).

Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory

Hanoi, Hoai Duc district, Khu Do Thi Moi Van Canh (HUD).

Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory

Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory

Hanoi, Ha Dong district.

Research Question 1. What is the link between the global crisis and the Vietnamese crisis? 2. How did real estate financing mechanisms evolved in Vietnam before the crisis and what role did this evolution played in the crisis? 3. What part did foreign developers and investors play in this crisis – and by extension in the evolution of Vietnam‟s real estate market?

HCMC, District 2.

Danielle LABBE & Clément MUSIL Vietnam’s real estate trajectory Hanoi, Hacrisis Dong district.

Our methodology Interviews  Bankers (domestic and foreigners);  Real Estate Domestic Developers (in Hanoi and HCMC);  Real Estate Foreign Developers/Investors (from Singapour, investment funds);  Architects (domestic and foreigners);  Civil servants (Ministry of Construction, Natural Ressources and Environmant; People's Committee);  International lawyers firms;  International real estate consultant and brokers (Collier International, Cushman & Wackfield…);  Local researchers;

HCMC, District 7, Phu My Hung

Local press review  Vietnam Investment Review; Vietnam Economic Times; Thời báo Kinh tế Việt Nam…

HCMC, District 2. Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory

The link between the global and the Vietnamese crisis Difficult to establish a link because:  Real estate investors and developers are mainly domestic and related to the State;  Macroeconomic difficulties due to strong inflation (20% in 2008 and 18% in 2011);  State Bank of Vietnam adjusts lending rate to limit housing mortgage.

Hanoi, Eco Park.

Danielle LABBE & Clément MUSIL Vietnam’s real estate trajectory Hanoi, Hacrisis Dong district.

The evolution of real estate financing mechanisms  Beginnings of the property market „sophistication‟;  Establishment of investment funds specializing in real estate; BUT  The legal framework is under construction;  For the developers, the major way to fund projects is “sale on plan”;  For the buyers, the main way to finance their purchasing is informal credit.

Hanoi, Ha Dong district, Le Van Luong area

Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory HCMC, District

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The part of foreign developers and investors  Up to 2000s, foreign actors invest in production of office, leisure and retail space;  Foreign investment in real estate triples between 2004 and 2008, to reach 23 U$ billion; BUT  International developers still have land access constraints;  Behave like their domestic counterparts.

HCMC, District 2, Capital Land

Danielle LABBE & Clément MUSIL Vietnam’sDistrict real estate2,crisis trajectory HCMC, Keppel Land

Main conclusion  Vietnam real estate crisis is a consequence of mismanagement of public investment and speculative behaviour from developers and individuals buyers;

 The role of international actors is marginal in this crisis but as they are acting like domestic developers, they intensified existing problems.

Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory

Danielle LABBE

Clément MUSIL IPRAUS

Danielle LABBE & Clément MUSIL Vietnam’s real estate crisis trajectory