The agency under the Ministry of Planning and Investment in its latest report showed that Vietnam attracted US$12.69 billion from 919 fresh projects as well as additional funds from 423 existing ones in the 11-month period. This amount is 16% lower than the year-ago period. 

The property sector used to took the lead in attracting foreign investment, but this year it fell to the fourth place and trailed far behind pledged funds in manufacturing, power generation and distribution, and construction sectors. Only US$464.13 million was committed into the property sector in the year to date, according to the agency. 

A glance at foreign direct investment (FDI) into the property sector in previous years may stun observers over the sharp fall. 

Specifically, the flow was at the peak level in 2008 when some US$23 billion was poured into property projects. Even in the midst of the property slump last year, the country still attracted US$6.84 billion of FDI into the sector.

There are many reasons for the drop, and one of them is the impact of economic woes, said experts. Besides, investors are now more cautious in making property investment decisions due to the gloomy economy, increasing inflation and high interest rates, and low liquidity in the sector.

In addition, the Government has this year issued tightening policies to limit credit flows in non-production sectors, especially property, making it hard for investors and banks to mobilize and disburse capital. 

Vietnam’s property sector is not as attractive as it used to be a few years ago due the increasing number of such projects and huge investments of local investors, explained property firms. 

In practice, many investors in Hanoi and HCMC have recently lowered office leasing and apartment selling prices. Besides, construction of many projects has been slowly implemented or even come to a dead halt. 

Hanoi and HCMC also have seen a small number of new projects, and investors are trying to complete unfinished projects. 

According to the Foreign Investment Agency, the production sector attracted the most interest of foreign investors with 382 new projects worth US$6.24 billion, or 49.1% of the period’s total registered capital. 

The power generation and distribution came second with US$2.53 billion or 20% of the total while the third position belonged to the construction sector with US$1.19 billion or 9.4%.

Some US$10 billion of FDI capital has been disbursed in the 11-month period, up 1% year-on-year.