The Critical Bottleneck: Indochina Capital Chairman’s Emphatic Message on Unlocking Vietnam’s Real Estate Market Potential

From the 30th floor of a hotel in Singapore, Peter Ryder observed over 10 large-scale construction projects, with high-rise buildings sprouting up side by side.

“However, if you go up to the 30th floor of any building in Hanoi, Ho Chi Minh City, or Danang, you’ll see one building here, another there, but mostly what you’ll see are two or three-story houses, shop houses, and the like,” he noted.

With a population of 100 million, the demand for quality real estate, be it commercial, residential, or tourism-oriented, will continue to grow exponentially. Of course, the market will not grow in a linear fashion; there will be ups and downs. But in 30 years, the amount of new development could be tenfold compared to what we’ve seen in the past 30 years,” predicted the Executive Chairman of Indochina Capital and Board Member of Indochina Kajima.

As someone who came to Vietnam in the early 1990s and pioneered the development of high-end real estate in the country, how do you assess the evolution of the Vietnamese real estate market over the past three decades?

A lot of things have changed in Vietnam over the last 30 years. There are more buildings, and they’re getting taller and more beautiful. But as I mentioned, the Vietnamese real estate market is still in its infancy.

Of course, there have been some large-scale projects with 10,000-20,000 apartments undertaken by local developers. But considering the current demand, Vietnam’s increasing wealth, and the availability of land surrounding major urban areas, the amount of real estate development in the next 30 years could be ten times what it is today.

Additionally, I believe that the combination of experienced local developers and government support bodes well for the market in the next decade.

Compared to other countries with similar conditions that have already developed, how do you assess the current position of the Vietnamese real estate market?

If we compare Vietnam to other ASEAN countries like Thailand, Malaysia, and Indonesia, it’s still relatively early in the real estate development process. Thailand and Malaysia started transitioning from a frontier market to an emerging market and developing much earlier than Vietnam, about 20 to 25 years earlier. In contrast, Vietnam has made significant strides since the late 1980s and early 1990s. Indonesia had a similar development timeline to Vietnam, but their growth rate has been somewhat slower.

In terms of volume, density, and scale of development, Vietnam still has a lot of potential. For instance, if we compare Bangkok to Ho Chi Minh City, Bangkok is far more advanced, especially in terms of infrastructure. However, when it comes to the quality of real estate projects being built, Vietnam is now on par with Thailand, Malaysia, and Indonesia in many respects. And compared to Cambodia, Laos, or Myanmar, Vietnam is even more advanced. So, I’d say Vietnam is in a very good position at the moment and rapidly progressing.

How do you assess the opportunities for foreign developers in the Vietnamese market?

Foreign developers certainly still have opportunities in Vietnam, but they need to have the right strategy. Local companies currently have the upper hand in terms of volume and local market knowledge, so foreign investors should focus on their unique strengths. These strengths include bringing international expertise, introducing innovative ideas, leveraging global networks, and maintaining a strong commitment to quality.

For example, at Indochina Capital and Indochina Kajima, we always emphasize innovation and setting new standards. It’s crucial to identify market gaps where foreign expertise can add value—be it in design, management, or introducing new product types such as lifestyle hotels or ultra-luxury resorts. Additionally, partnering with trusted local or regional partners, such as our collaborations with Hong Kong Land and the Kajima Corporation, is essential. These collaborations help foreign investors better understand the market, ensure approvals from the authorities, and efficiently execute projects.

Lately, Vietnam has been emphasizing its “Era of Rising” to mark a new phase of development. In your opinion, how can international real estate companies like Indochina Capital contribute to Vietnam’s comprehensive development in this context?

The most accurate description of Indochina Capital is innovative. If you look at our history and what we’ve done, it’s evident. Take, for instance, the building at 63 Ly Thai To, which we developed in partnership with Hong Kong Land. It’s one of the leading commercial properties in Hanoi in terms of both location and architecture.

Then there’s The Nam Hai resort, Vietnam’s first ultra-luxury resort, which set the standard for high-end hospitality in the country. Another example is the IPH Xuan Thuy project, launched around 2011-2012. At that time, it was widely acknowledged that the apartments there were of the best quality in Vietnam. We’ve also introduced the Wink Hotels chain, featuring modern designs that have become increasingly popular with guests.

Beyond hospitality, we’ve ventured into industrial real estate with projects like Core5 Vietnam, developed in partnership with Kajima under the Indochina Kajima joint venture. With three completed projects, two of which are fully occupied and one nearly so, we’ve demonstrated that innovation has a place even in the industrial sector.

In this “Era of Rising,” international companies like ours bring expertise, global standards, and fresh ideas to complement Vietnam’s growth trajectory. We’re not just building structures; we’re building aspirations and setting new benchmarks. Whether it’s ultra-luxury resorts, innovative industrial developments, or groundbreaking hotel concepts, we aim to contribute to Vietnam’s ascent with the best-in-class projects in each segment.

It’s essential to understand the business culture and working methods in Vietnam. Additionally, I often share with people the three critical factors for investing, which I refer to as the 3Ps: Patience, Perseverance, and Persistence.

Given its potential, what bottlenecks does the Vietnamese real estate market need to address to truly take off?

I believe that infrastructure is the foundation for Vietnam’s future development, both in real estate and the economy as a whole. But it’s also the most critical factor holding back the industry. While there has been some progress, there’s still a long way to go. Projects like highways, airports, and metro expansions are often delayed or underfunded.

With Vietnam’s current airports already overwhelmed, completing crucial projects like the Long Thanh International Airport near Ho Chi Minh City is essential. For instance, when I fly back from Singapore on Monday nights, despite having priority status, I have to queue for 45 minutes to clear immigration. This consistently happens in Ho Chi Minh City. In Hanoi, the wait time might be slightly shorter, but it’s still around 30 minutes. This isn’t a great experience, especially for first or second-time visitors to Vietnam.

There’s also a need to expand the network of highways and develop additional metro lines in major cities like Hanoi and Ho Chi Minh City. It’s unfortunate to see projects being delayed, with the government allocating billions of dollars to infrastructure annually, only to fall short of disbursing it all by the year’s end. However, the government is increasingly recognizing the importance of infrastructure, which is a positive sign.

The high-speed rail project, which has been discussed for decades, is finally making tangible progress. Despite the complexities involving land clearance and costs, it remains essential for long-term economic growth and regional connectivity.

At an investment conference in Phu Yen, I emphasized that the three most critical factors for economic development are “infrastructure, infrastructure, and infrastructure.” Without a modern system of highways, airports, and transportation, Vietnam cannot fulfill its potential.

Secondly, there’s the legal aspect. Last year, the National Assembly passed three important laws: the Land Law, Housing Law, and Real Estate Business Law. All three laws are positive steps forward, providing clarity on issues like land use rights and ownership certificates. However, there’s still a lot of work to be done legally to develop the real estate sector more efficiently and transparently.

I always tell people that real estate is a very complex business, no matter where you are. In Vietnam, it’s even more challenging because the market isn’t as mature, and the legal and financial systems are not yet fully developed.

If you want to develop a project in New York, Paris, or Hanoi, you’ll go through about 150 steps, from approvals and permits to design and financial planning.

The difference is that the processes in New York are more transparent. In New York, real estate developers know exactly what the process and costs are for each step. In Vietnam, you’d be very lucky if, from the outset, you’re certain about 50 out of the 150 steps you need to take.

So, while there have been improvements, transparency remains a significant challenge, and addressing it would pave the way not just for individual companies or projects but for the entire real estate sector in Vietnam.

Thank you for your insights!