VietNamNet Bridge – Though admitting that the Vietnamese real estate market has great potentials, Japanese property firms still keep hesitant with the investment opportunities in the market.

According to Yasuzumi Hirotaka, Managing Director of Jetro (the Japan External Trade Organization) in HCM City, Japanese keep cautious with the Vietnamese market because the problems still exist and the business environment still is not good as expected.

Unlike the enterprises in the manufacturing and processing industries which have been pushing up their investment in Vietnam, Japanese firms still worry about the investment environment, the problems relating to the taxation and underground fees.

He said Japanese investors see higher risks in the Vietnamese market than in others like Singapore.

The Japanese firms in the real estate sector don’t have a lot of technology “know-how” like manufacturing and processing enterprises. Therefore, they would only make investment when they feel secure about the business environment which is stable and transparent.

In general, Japanese only make investment decisions after they consider everything thoroughly. Therefore, though they know it’s now the right time to buy because of the low prices, they do not take the risk to pour capital into the real estate market, especially when the Japanese yen is depreciating.

However, some Japanese real estate firms have set foot in the Vietnamese market over the last two years. Tokyu group has come with the project on developing a new urban area capitalized at $1.2 billion at the center of the new city of Binh Duong in Binh Duong province in cooperation with Vietnamese Becamex IDC.

With the commitments by Tokyo Mitsubishi UFJ Bank to provide loans, the joint venture plans to build 7,500 apartments, amusement establishments, shopping malls and offices.

Mr. Hirotaka thinks that in the project, Tokyu has found a reliable and capable partner. Especially, the project developers have received the active support from the Binh Duong provincial authorities.

Japanese always keep very fastidious about choosing Vietnamese partners and the way to implement real estate projects. Therefore, if they find potential projects and reliable partners, they would be daring enough to pour capital. EXS Capital investment fund recently has poured $37 million into the Son Kim Land, a Vietnamese real estate firm.

Neil MacGregor, Managing Director of Savills Vietnam, said in a press release that Savills Vietnam’s representatives has been to Japan continuously recently, where they, together with Savills Japan, have organized the workshops showing the opportunities in Vietnam to Japanese investors.

He said Japanese have expressed their big interest in the Vietnamese market, hoping that Vietnam could be the destination for medium and long term investments.

Though the Vietnamese real estate market got frozen in 2012, the foreign direct investment (FDI) into the real estate sector was still high.

A report of the Foreign Investment Agency (FIA), an arm of the Ministry of Planning and Investment, the registered investment capital into the real estate sector in 2012 reached $1.85 billion, or double that of the year before, accounting for 14.2 percent of the total registered FDI capital.

In 2011, the FDI into the real estate sector was just $850 million, which just accounted for 5.8 percent of the total registered FDI capital of the year.

Thanh Mai