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Viet Nam's depressed real estate market has yet to show any signs of recovery, but some foreign investors say they still plan to invest in property projects.

Property prices in Viet Nam, particularly major cities like Ha Noi and HCM City, have plummeted by 40 to 60 percent.

The fall in price has helped many properties return to their true value, encouraging investors, particularly foreigners, to invest in the local market, according to independent market watchdogs.

Experts said foreign investors were interested in hotels and properties serving the tourist market because current supplies could not meet demand.

Many foreign investors are interested in building commercial centres as well, they said, adding that many projects also need additional capital to complete construction.

VinaCapital, a foreign investment fund, says that in addition to its property investment fund Vinaland, it will add a new property fund called Vinaland Partners early next year.

The new fund's main investment area will be the Vietnamese real estate market, with a focus on hotels, apartments, trade centres and office buildings.

The British Prudential Insurance Company's property investment fund also plans to set aside capital for property investment.

Possible recovery

Do Thi Loan, general secretary of the HCM City Property Association, said many foreign investors were interested in building large shopping centres because they recognised the potential of retail trade in Viet Nam and had just a few of centres at present.

According to Vinacapital, the real estate market will continue to face difficulties because of tightened credit and high interest rates of bank loans, but a recovery could occur within six to 12 coming months.

David Blackhall, deputy managing director of VinaCapital Real Estate, said the local real estate market next year would be somewhat turbulent but would grow in late 2009 because of high demand.

Many apartment projects are unfinished because project owners, who cannot access bank loans, lack capital, leaving the door open to foreign investors who want to invest in the Vietnamese property market, Blackhall said.

McKinnon, general director of AIC, also said that construction costs in the local market would continue to fall in the first quarter of 2009, and more capital from banks would be available because lending rates would be lower.

McKinnon said this would help speed up the construction of existing property projects and help promote investment.

Chau Vinh Quang, vice chairman of the VinaGlobal Securities Company, said the market was ripe for new investment.

Market experts say that foreign investors began returning to the Vietnamese property market some months ago.

In early November, Aseana Properties, a US-registered company that invests in Malaysia and Viet Nam, purchased 51 percent of the total number of shares, worth US$27.6 million, in HCM City's Hi-Tech Health Park. The one-million plus sq.m Hi-Tech Health Park comprises private hospitals, trade centres, hotels and restaurants.

In addition, Aseana Properties in July purchased US$18.03 million worth of stocks in the Nam Long Investment Company.

Source: Vietnam News

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