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Vietnam Real Estate - The cooling real estate market has not hindered foreign investors from pouring money into resort and hotel development.

The potential recently saw Vietnam-Spain Consultants Company (VS Consultants) signed a memorandum of understanding to buy 20 per cent, or six million shares priced at VND18,000 ($1.06) per share of local Vinaconex Investment and Tourism Company (Vinaconex ITC).

VS Consultants has also poured money into building some parts of the Cai Gia-Cat Ba tourist urban area, the biggest tourism project in northern Vietnam, which is being developed by Vinaconex ITC. The project comprises modern villas, an international convention centre, underwater palace, beaches, trade centers and highclass hotels.

The State Reserve Fund Oman (SGRF) had previously also invested $20 million in the project. Vinaconex ITC general director Tran Ngoc Quang said although the current cooling real estate market was clearly seen in the land and apartment segments, supply for tourist resorts, offices and industrial parks could not meet demand.

General secretary of the Ho Chi Minh City Real Estate Association, Do Thi Loan, said foreign investors had also been interested in building trade centres in Vietnam. Demand for these centres was predicted to be much higher in the next few years after Vietnam opens up its domestic market for the establishment of 100 per cent, foreign-owned distribution firms from January 1, 2009.

VinaCapital is to raise another real estate investment fund which will issue shares worth up to $400 million and is scheduled to start operate in early 2009 to prepare for investment opportunities in the Vietnamese market. David Blackhall, VinaCapital deputy managing director, said foreign investors were interested in Vietnam`s real estate market and had prefered building unlisted investment funds in the country.

There would remain difficulties in the local real estate market in 2009, but it would recover and grow again in late 2009, Blackhall said. According to the projection of AIC general director, Gary McKinnon, construction costs would continue to decrease in the first quarter of 2009. Investors were also forecast to enjoy greater access to bank loans with lower interest rates.Land and house prices in major cities has so far declined by 40 per cent from early last year.

By Manh Hoai/ VIR

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