'I just don't know how the smaller guys are coping'
Nguyen Van Khanh is sitting on his haunches in the middle of Hanoi's Giang Vo 'people's market' with dozens of other rural peasants hoping to be hired as day labour.
He brushes dust from his tattered fatigues and worries about the future - next week's rent and food. 'Work on the big sites is drying up,' said the 27-year-old veteran of two years' toil in the capital. 'I hear some of the skyscrapers are even empty. I just do not understand how this can happen. What is happening to all the new foreigners?' As the prospect of a lean 1999 looms, Hanoi's property market paints a grim picture of foreign-investor sentiment as both concern over local reform and the Asian crisis take their toll on what is still one of the region's only growing economies.
Prime office space has increased by more than 50 per cent in the past year - the result of a boom planned during far more rosy times. But as the buildings have gone up, rents have more than halved to as little as US$15 (HK$116) per square metre. One private-sector estimate claims more than half the 114,000-odd square metres is now vacant and any projects yet to start are on hold for a least two years.
The most striking victim is the US$70 million Hanoi Sheraton, a Malaysian-Vietnamese joint venture that dominates West Lake on the edge of the capital. A year after completion it has yet to open amid ongoing funding problems.
In the heart of Hanoi's increasingly elegant central business district, even Hong Kong Land is feeling the pinch. An eight-storey US$25 million building facing the newly restored opera house - widely considered the top office building in the country - is just over 50 per cent leased after opening in March.
'We're here for the long term and hope to attract the long-term foreign players and are not too worried,' said leasing manager Simon Craig. 'But I just don't know how the smaller and medium-sized guys are coping in this environment.' Talk of an exodus of foreigners is hard to quantify with no official immigration figures available but shippers say privately that they are moving out six foreigners for every one coming in as even the largest investors retrench. Estimates of the foreign population range from 3,000 to 6,000, many of whom arrived after the US embargo was finally lifted in early 1994.
Fears are also building both among Communist Party cadres and foreign investors over how Hanoi will compete when regional markets lift and capital starts to flow back to the region.
'At this point it is hard to see what could happen to lift the sentiment of foreigners out there. It would take major bureaucratic changes to licensing procedures that I don't think are going to happen any time soon,' said Tony Foster, lawyer for the British-based legal firm Freshfields, and a five-year veteran of Hanoi.
Yet, ironically, as the gloom descends, Hanoi's middle classes seem to be spending more money than ever as boutiques open by the day and swank nightclubs fill with brandy-swilling young professionals and the whole city takes on a new sheen.
'I can't figure out where all the money is coming from,' one seasoned foreigner said. 'I'm starting to think everything I have heard about the black economy is true.
'Maybe there is all this money under mattresses that is now being spent.' Already top-level concerns are being voiced about the departure of foreigners. Prime Minister Phan Van Khai acknowledged requests to restore investors' confidence.
'We are doing our utmost,' he said. 'In return, we expect foreign investors to reinforce our confidence in their commitment to long-term and mutually beneficial investments.'