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Dec 16, 2009 | PwC: HCMC - Most attractive for real estate in Asia Pacific

Ho Chi Minh City remains one of the most attractive markets for real estate development in the Asia Pacific region..

Ho Chi Minh City 16 December 2009 – Real estate markets in the Asia Pacific region are holding up “surprisingly well” in the aftermath of the global recession compared to markets in the United States and Europe, according to the Emerging Trends in Real Estate® Asia Pacific 2010 report published by the Urban Land Institute (ULI) and PricewaterhouseCoopers LLP (PwC).

The report provides an outlook on Asia Pacific real estate investment and development trends, real estate finance and capital markets, and trends by property sector and metropolitan area. It is the fourth Asia Pacific edition of the highly regarded Emerging Trends in Real Estate® annual investor survey. The report is based on the opinions of more than 270 internationally renowned real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants.

In terms of investment prospects, Shanghai, Hong Kong and Beijing rank first, second and third. These cities were ranked 5th, 3rd and 12th respectively last year. Ho Chi Minh City is ranked 13th, maintaining its position from 2009 (13th). The Development prospects in Ho Chi Minh City remain very high, overall it is ranked 3rd after Shanghai and Mumbai.

Since the onset of the global economic meltdown, asset markets in the Asia Pacific region have fared better than those in Europe and the United States, the report states. While both pricing and rentals in the region fell steeply in 2008 and early 2009 in step with those in the West, markets across the Asia Pacific region have been lifted in the second half of the year by the remarkable resilience of the Chinese economy, which has been buoyed by a series of fiscal and monetary stimulus measures.

As a result, many Asian markets have begun to flash positive signals toward the end of 2009. Transaction volumes have rebounded, albeit from a very low base and led overwhelmingly by China.

“Pricing has improved across the region. While the upturn has been modest in most cases, moves have been substantial in some asset classes and geographies, especially in China. Chinese cities dominate the rankings this year, which is a reflection of a remarkable resurgence in Chinese commercial real estate as the government-mandated liquidity boom lifts markets across the country.” said KK So, PwC Real Estate Tax Leader for the Asia Pacific region based in Hong Kong.

In spite of a stalemate between buyers and sellers in some markets, and significant rent fluctuations, Asia has in general experienced both an increase in transaction volume and higher property prices – with a large part of the upturn occurring in China, the report notes. Unlike the prevalence of distressed sales occurring in the U.S. and Europe, distressed sales in Asia have been relatively minimal.

City Development prospects - 2010
Rank / City
1 Shanghai
2 Mumbai
3 Ho Chi Minh City
4 New Delhi
5 Beijing
6 Seoul
7 Bangalore
8 Guangzhou
9 Taipei
10 Hong Kong
11 Singapore
12 Kuala Lumpur
13 Melbourne
14 Sydney
15 Tokyo
16 Bangkok
17 Jakarta
18 Auckland
19 Manila
20 Osaka
 
In 2009 Ho Chi Minh City was ranked 2nd in terms of development prospects after Bangalore and preceding Mumbai. The city is viewed as having the second highest potential in two of the five development categories: retail and hotel. With respect to Industrial / distribution property, Ho Chi Minh City is ranked 4th, the ranking in the office property category is 6th and in the residential (rental) apartments category 7th.
 
Development prospects in Ho Chi Minh City 2010 and 2009



2010
2009

Rank Buy recommendations Rank Buy recommendations
Office property 6th 32.9% 1st 49%
Industrial/distribution property 4th 36.7% 2nd 47.8%
Retail Property 2nd 41.8% 1st 51.1%
Residential (rental) apartments 7th 36.2% 1st 36.6%
Hotel property 2nd 33.3% 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 despite lower level of buy recommendations than last year, Ho Chi Minh City continues to be an attractive market to property developers and investors. The city remains one of the highest opportunity locations in South East Asia. The report also reflects that the gap between the development potential of various property categories increased. Overall, we continue to believe that Ho Chi Minh City is a very attractive location for developers with a long term view and that have access to cash. We expect the commencement of major new projects in 2010.”
 
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About PricewaterhouseCoopers Vietnam
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
PricewaterhouseCoopers established offices in the Vietnamese cities of Hanoi and Ho Chi Minh City in 1994. Our team of approximately 500 local and expatriate staff have a thorough understanding of the transitional local economy in which they work and a wide knowledge of policies and procedures covering investment, tax and accounting and consulting throughout Vietnam.
* PricewaterhouseCoopers and PwC refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL). Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm's professional judgment or bind another member firm or PwCIL in any way.
 
About the Urban Land Institute
The Urban Land Institute (www.uli.org) 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 creating and sustaining thriving communities worldwide.  Established in 1936, the Institute has nearly 34,000 members representing all aspects of land use and development disciplines.
 

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