While foreign investors always go to Ho Chi Minh City first, those investors will start shifting to Hanoi, said Marc Townsend, CBRE Vietnam’s managing director, at a seminar on January 6.

Townsend estimated that about 80 percent of CBRE's money from investors in 2009 came from Hanoi. He suggested that Hanoi is no longer just a place where government invests; it will become looked at as a big city with the best investment opportunities and the best market with the best night life. Head offices, including CBRE's (now based in Ho Chi Minh City), will increasingly start moving to Hanoi.

“The condo market in Hanoi may have been the best kept secret in Vietnam for the past 2 years, but the secret is out,” Townsend said.

Real estate services company CBRE held the seminar to review 2009 and provide insights and projections for the market in 2010.

2009 was a year that saw inflation re-emerge, interest rates increase, supply availability become limited and new legislation that actually led to more transparency, a plus for foreign investors in particular.

Townsend urged people to follow the lead of speculators in 2010. "If speculators are there, you should join them, they know something we don't," he also warned that, "If you link your prices to the dollar, you will become very unpopular."

CBRE foresees that 2010 will see even more legislation that will help foreign investors. Bridges and major highways will start connecting cities but there are some things to be cautious about as well. Vietnam was selling an average of 300 cars per day in 2009 versus opening only 1 kilometre of road space. Congestion, pollution and traffic problems are becoming worse. Pressure on infrastructure has gotten worse as well.

Townsend suggests that these pressures will now begin to really impact people’s decisions from leisure activities to investments. He also cautioned that Vietnam is at risk of running out of water and power, which will, inevitably, effect real estate markets.

However, CBRE also points out that there is new infrastructure that will open up as well. From a new seaport to new airports in Danang, Dalat, and Nha Trang, all of these will link domestic travel. Will it be enough to bring in the big budget airlines? That remains to be seen.

While Townsend acknowledged that villas will remain the aspiration for most families, he also pointed out that people are coming to terms with the rising urban costs and this will result in a rise of suburban projects. Condo's will also be highly sought after, but investors from places like Malaysia and Singapore have now discovered Hanoi.

Another area of real estate to be considered is the second home market. "This we did not expect at all, it took us completely by surprise," Townsend admitted.

The big issue here, according to CBRE, is that developers will finally realise that the target buyers for second home markets will be Vietnamese. Foreigners will no longer be the main target. In office and shop rentals, we can also expect to see a shift in that local companies are now just as likely as foreign companies to take quality space.

Another area where Townsend predicts we will see a rise in value is serviced apartments. In 2009, they had about 20 percent of rooms unoccupied. CBRE projects about a 95 percent occupancy rate by mid-2010.

Hotels will also likely increase their business activity with several more projects going up and an increase in travel, both domestic and international.

As for industrial real estate shifts in 2010, as the road infrastructure improves as well as the opening of airports and eased international transport, the northern market will likely gain the attention of investors.

Vietnam has long been in the shadow of Chinese investments, and Townsend declared that, "Vietnam is now a story on its own, not just a story on the coat tails of China."