Real
estate developers will expose stronger competition with abundance of glittering
products in 2011, but opportunities are open for new investment.

Rapid urbanisation means the thirst for apartments will roll
on into 2011

John Gallander, managing director of Knight Frank Vietnam,
said the real estate market would steadily develop and customers would have
easier access to the products and more choices.

Real estate developers would focus more on the quality of
design and schedule of projects, Gallander told a seminar on Vietnam Real
Estate Market held last week in Hanoi,
jointly organised by Knight Frank, CapitaLand and Standard Chartered Bank.

Gallander said the real estate index, now being set up by
Ministry of Construction, would create a more transparent market for customers.

The Ministry of Construction (MoC) declared that since the
first quarter of 2011 the real estate price index would be set up in Hanoi, Ho Chi
Minh City, Danang and Can Tho.

Planned to launch in the third quarter of 2011, the index
will include residential, land and office for lease.

According to the MoC, the index will be calculated on the
real transaction in a certain area, but not based on the prices fixed by the
project’s investors.

Meanwhile, CapitaLand Vietnam
said the increasing population, urbanisation and people’s income meant demand
for accommodation in Vietnam
would be still huge in 2011.

Nguyen Thuy Duong, a representative from CapitaLand Vietnam
Investment Department, estimated demand from new household formation and
graduate couple between 25 and 29 years old was huge.

With the population size of this age of around 2.2 million
in urban area, estimated demand in Hanoi and Ho Chi Minh City is
around 132,000 units. This figure is larger even than the total current housing
stock of 115,000 units in these two cities.

CapitaLand also noted that Vietnam real estate market now had
relatively low apartment selling price but high land cost compared with other
key cities in the region. The long time required since local developers
acquired the land until the launch of the project and low transparency were two
existing hurdles for investors, Duong said.

Investing in real estate, Gallander said, investors would
receive investment return of between 5 to 15 per cent, or an average of 10 per
cent annually, a percentage which was rather stable than other channels.

Source: VIR