The GDP of Vietnam in the first six months of 2011 has decreased to 5.6%, a decrease of 0.6% in comparison with the same period of 2010. According to the Ministry of Planning and Investment, this result is very positive despite the economic difficulties faced by the domestic and international communities and the impact of monetary tightening measures applied by the government to curb inflation.
CPI in the first six months of 2011 increased by 16.0% over the same period last year, and 13.3% compared to December 2010. Recently, the government adjusted the inflation target in 2011 from 7% to 15%.
According to GSO, in the first six months of 2011, FDI registered capital reached approximately US$5.66 billion which equates to 56.7% in comparison to the same period of 2010. Ho Chi Min City is the most attractive location for foreign investors with about US$1.6 billion, followed by Ba Ria – Vung Tau, Binh Duong, Dong Nai and Hanoi.
Singapore is still the biggest foreign investment partner in Vietnam with the total registered FDI capital reaching US$1.3 billion in the first six months of this year.
In the second quarter, 26 new residential projects were launched with a total of 1,400 units. In total there was an additional supply of over 3,200 units of existing and new project launches in the second quarter.
In terms of supply by Grade, Grade C has fallen from 81% in the first quarter of 2011 to 70% of the total stock in the second quarter of 2011. Grade A+ & A has grown from 2% in the first quarter of 2011 to 5% in the second quarter of 2011 whilst Grade B is up from 17% to 24%.
Average price reductions occurred across all Grades in the second quarter. Grade A prices have declined from 78,000,000 VND/sq.m. in the first quarter of 2011 to 77,500,000 VND/sq.m. in the second quarter of 2011, Grade B from 34,000,000 VND/sq.m. to 31,900,000 VND/sq.m. and Grade C from 18,000,000 VND/sq.m. to 13,900,000 VND/sq.m.
Developers are attempting more creative ways to attract buyers to their projects in a competitive market restrained by the government’s tight monetary policy and high inflation. The response of the market to these promotional efforts have been limited but there are signs of positive interest and improved take-up from projects led by foreign or experienced developers with medium to long term investment potential.
There has been an anticipated correction in pricing in the Ho Chi Min City Residential Sales market during the first half of 2011 especially in the Grade C market. However, the medium-long term outlook remains positive, with prices expected to stabilize towards the end of 2011 and liquidity will improve once the government’s policies take effect.