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Macroeconomics: GDP growth in 2016 was lower than in 2015 and the government's annual target, but given the negative impact of harsh climatic conditions, environmental disasters and volatile geopolitics throughout the year, the result was considered positive.Strong increase in FDI, retail sales and the number of international tourists, coupled with improvement in the manufacturing and service sectors, was resulted in a healthier shift in the country's economic structure. For 2017, both the government's annual target and the World Bank's forecast are more positive than the 2016 actual results, based on expectations regarding the continued growth in manufacturing and services sectors, and coupled with the recovery of the agriculture, forestry and fisheries sectors amid the a reasonably promising outlook for the international economic situation.
FDI flows into Vietnam, disbursement and newly registered capital, increased on a y-o-y basis in 2016, showing that Vietnam is an attractive investment destination for foreign investors. This positive sentiment is set to continue into 2017, thanks to the country's advantages of economic and political stability over others in the region, its continued efforts in entering into a number of bilateral and multilateral treaties and the improving business environment of a number of large economies.
Residential market: Both Ho Chi Minh City (HCMC) and Hanoi reported a very strong year, with multiple new highs recorded in all facets of the residential market. Total new launches of apartments in the two major markets reached more than 70,000 units in 2016, and total units sold amounted to more than 67,000 units, a significant improvement over the last few years. In line with the positive sentiment in both demand and supply, prices remained on the uptrend across all the markets in 2016. In 2017, it is likely that the existing good momentum will continue and the residential market will move into a more sustainable mode with the expansion of lower-end segments and the improvement in owner-occupier demand versus investor demand. Prices will grow further.
Office for lease market: In both cities, total Grade A and Grade B net absorption in 2016 was lower on a y-o-y basis, but this was mostly the result of limited supply and the number of enquiries remained at good levels. In 2017, the office for lease market, especially in HCMC, is expected to see increased leasing activity with completion of two Grade A and one Grade B office buildings, all large-scale projects.
Retail market: The retail for lease market in 2017 will continue to see improvement, in terms of increased footfall and revenue in existing developments, an increase in the number of new retail centre openings and new international brand entries, and the expansion of existing retailers, both local and foreign, providing many types of goods and services. This is expected to be in line with the growth in residential supply, infrastructure and middle-class income. The new year is likely to experience intense competition between local developers and foreign investors, and of bricks-and-mortar retail versus online shopping.
Stephen Wyatt, Country Head of JLL Vietnam, comments: "Market in Vietnam will witness another strong year in 2017. The economy is performing well and is considered one of the best performers in SEA. We expect to see considerable activity in all sectors of the market with positive focus on low-mid end residential in cities, the HCMC office market, hospitality and industrial. Based on the considerable no of enquirie, we are receiving from both foreign and domiestic investors, we expect M&A activity will be a "record" year in 2017"
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10 January 2017