Ho Chi Minh City continues to be an attractive market for real estate development

Ho Chi Minh City 16 December 2008 – Real Estate industry experts in Asia anticipate falling asset prices, widening cap rates, deteriorating debt markets, increasing foreclosures and bankruptcies, and plummeting transaction volumes as the Wall Street crisis travels the globe, according to the Emerging Trends in Real Estate - Asia Pacific 2009 report, released earlier this month by the USA based Urban Land Institute (ULI) and PricewaterhouseCoopers

The report provides an outlook on Asian Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area. It is the third Asia Pacific edition of the highly regarded Emerging Trends in Real Estate® annual investor survey. The report is based on the opinions of internationally renowned real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants. The survey covered twenty key cities in Asia, including Ho Chi Minh City as in earlier years.

The investing landscape has undergone a substantive and possibly permanent change in the region, according to the report. Asian banks have re-rated real estate for risk, and with the re-pricing of debt, investors will demand higher yields. The days of financing property via highly leveraged borrowing appear to be gone.

"Despite the dramatic change in investing landscape, Asia continues to be seen as a good place for real estate investors to diversify away from beleaguered markets in the West as they seek to rebalance their portfolios,” said KK So, PricewaterhouseCoopers Real Estate Tax Leader in Asia Pacific. “The trend will see more traditional players who will shop for quality assets in major locations. There will be more realistic pricing expectations,” Mr. So added.

For 2009, the new mantra for real estate investing is focus, focus, focus, and to be “picky about markets and partners,” said one interviewee. The report recommends: “Not to stray from one’s area of expertise and geography.”

In terms of investment prospects, Tokyo, Singapore and Hong Kong rank first, second and third. Ho Chi Minh City is ranked 13 th , lower than in 2008 (8 th ) and in 2007 (12 th ). However the Development prospects of Ho Chi Minh City remain high, overall it is ranked 2 nd after Bangalore and preceding Mumbai. In three development categories, office, retail and residential rental property, the city is viewed as the best place for development prospects.


Development prospects in Ho Chi Minh City 2009

 
Rank
Buy recommendations
 Office property
1st
49.0%
 Industrial/distribution property
2nd
47.8%
 Retail Property
1st
51.1%
 Residential (rental) apartments
1st
36.6%
 Hotel property
3rd
42.9%



According to David Fitzgerald, Ho Chi Minh City based Tax partner and real estate industry expert of PricewaterhouseCoopers Vietnam: “The survey results show that Ho Chi Minh City continues to be a market of immense interest to property developers and investors. The opportunities are evident to all. The report highlights the interest from investors in buying properties in all sectors, but they are hindered by the limited supply of stock. Development opportunities are going to continue to be key. 2009 will be a challenging year with access to credit likely to be a key obstacle, but developers that are able to take a long term view, and that have access to cash, are likely to consider the city for new projects.”



About the Urban Land Institute

The Urban Land Institute is a global non-profit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in sustaining and creating thriving communities worldwide. Established in 1936, the Institute has more than 40,000 members representing all aspects of land use and development disciplines.