SINGAPORE (Dec 22): The property market in Vietnam is gaining more interest again and investors with longer memories might recall an era of frenzied activity in the middle of the last decade.

Winfield Wong, Head of Banking at HSBC Vietnam, has a way to tell if the underlying demand for property is driven by speculators or real local buyers.

“Look at what’s parked outside the showrooms: do you see cars or do you see motorbikes? When you see motorbikes, they are genuine buyers,” says Wong, in an interview with The Edge Singapore.

His optimism is driven by growing consumer income in the country. In 2009, it was just around US$1,000 per capita, but since then it has more than doubled to US$2,200 ($3,096) now.

“We expect both demand as well as improvements in productivity to have a positive impact on this per capita income. As you can imagine that this is starting from a very low base, percentage of growth will be phenomenal,” says Wong.

The growth is driven by general growth in the country’s economy, as foreign investors made their moves in sectors in property but also in supporting industries and markets like office space, hospitality, food and beverage, as well as manufacturing.

Broader changes in the economy are helping as well: Vietnam is one of the 12 initial signatories of the Trans-Pacific Partnership (TPP), which promises prospects of lower trade barriers. As a subset of sort, the Asean Economic Community, which aims for removal of tariffs among the 10 member states, is also slated to take effect by end of the year.

Besides trading agreements, the Vietnamese government’s active introduction of policies to stabilise its currency and interest rates have helped as well, as foreign investors need that kind of visibility before they can plan and commit.

“The business climate has become more conducive,” notes Wong.

Meanwhile, China’s growing cost of doing business has indirectly benefited Vietnam as well, as its still abundant pool of young labour force makes it more increasingly compelling for manufacturers to set up operations there, says Wong.

The garment making industry, specifically, will be a big beneficiary of the combination of these factors. Just by reducing tariffs alone will help increase margins of these companies by almost 25%, says Wong. Notable brands that have contract manufacturing operations in Vietnam include Lululemon, Polo Ralph Lauren, Tommy Hilfiger and Under Armour.

Other Vietnamese industries seen to benefit from the TPP electronics and potentially, the automotive, fishery sectors too.

Wong is unfazed at the slowdown that is inflicting emerging economies. HSBC’s economists see Vietnam’s GDP growing at 6.9% for Q42015 and to accelerate to 7.3% come Q42016.

He sees plenty of growth for HSBC, which is the leading foreign bank operating in Vietnam and is also one that has the strongest balance sheet. In contrast, the banking sector in another large Asean market, Indonesia, is dominated by local players. Foreign banks have more room to play in Vietnam.

“If you look at per capita income, that's going to grow by an impressive percentage. Then definitely, demand for banking is going to increase. The only question is, which segment?” asks Wong.

Perhaps where the motorbikes are parked could once again provide a clue to the answer.