The real estate market before a new cycle: After rain comes sunshine

According to experts, Vietnam's real estate market has experienced a decade of ups and downs when it passed the freezing period of 2011 - 2013, to the period of recovery and peaked in 2014 - 2016, then flourished from 2016 - 2018 and have leveled off from 2019 up to present. It is a decade of "overcoming difficulties" and affirming the market as well as the real estate enterprises.

“Vietnam's real estate market in recent years has grown in size and quality, increasingly proving it is an important economic sector, attracting a large amount of domestic and foreign investment. Market players have grown strongly both in number and capacities: there are more than 15,000 real estate enterprises, 1,200 real estate trading floors and more than 400,000 brokers.

In the past 10 years, Vietnam has developed 60 million m2 of houses each year, an increase of 6.5 m2/capita. The resort market also "changes for the better" with hundreds of projects spreading across tourist centers. Currently, the total revenue related to real estate accounts for about 10 - 11% of GDP, fully show the great influence of this field on the economy. Therefore, when the economy is in general difficulty, reviving real estate will be the premise for a series of other economic sectors to recover," emphasized Nguyen Manh Ha, Vice Chairman of the Vietnam National Real Estate Association.
 

Vietnam's real estate market in recent years has grown in size and quality, increasingly proving it is an important economic sector, attracting a large amount of domestic and foreign investment.
 

On that basis, according to experts, although starting the next 10-year cycle with a series of difficulties due to the impact of the epidemic, the market is quiet; however, in the long-term, real estate is still a channel of safe, attractive and profitable investment, especially for investors who know enough and can measure the risks to make investments. That is also the reason why real estate prices have not decreased in recent times despite the market being greatly affected by Covid-19.

"The current difficulties in Vietnam's real estate market is not originated internally but from other external factors," emphasized Nguyen Van Dinh, Vice Chairman cum General Secretary of the Vietnam Association of Realtors.

According to Mr. Dinh, in the years 2017 - 2018, Vietnam's real estate market developed very strongly. In 2019, the market "stagnated" a bit, and the market's indexes immediately fell more than 2018.

Accordingly, in 2017, 130 thousand  products was absorbed, jumping to 180,000 products in 2018, but in2019 there were only 110 - 120 thousand products. This showed that the market has a decline but it comes from the impact of the macro situation. Specifically, in the process of the strong development of the real estate market, many weaknesses of policies and laws had been revealed, causing many projects in big cities to stop for inspection, as well as restrict development of local projects.

“The fact that projects' suspension leads to a lack of supply, while demand is still strong. As noted, there are projects absorbed up to 90%. Specifically, in Ho Chi Minh City, there are projects whose selling price  is up to 40 million VND/m2, but within two or three months, 95% of them have been sold", the expert said and emphasized: "This is not a crisis due to the real estate market because the demand is still very strong and very large".

According to the General Secretary of the Vietnam Association of Realtors, for the problems and difficulties that real estate entreprice were facing before, the Government had taken very timely actions with a series of policies that were introduced, as such policies to develop condotels. For developing projects, the Government also issued Decree 25, etc.

With those solutions, according to Mr. Dinh, the real estate market should have been able to restore the development as it at the time before 2019, but at the beginning of this year the Covid-19 epidemic continued to have a great impact on the market.

“However, in my opinion, real estate will recover fastest compared to other industries. This is proven after the end of the first outbreak and the period of social distancing, the market has quickly restored transactions. We believe that the Government and people of Vietnam will surely succeed in controlling this second wave of epidemics. In the coming time, there is still a bright room for the real estate market, so we should still be optimistic," forecasted Dinh.

The expert added that in the current context, investors with little money should invest in banks, while for investors with stable potentials, real estate was still an investment channel with the largest space and profit potential.

“Real estate prices in Vietnam are generally still very low. For real estate in newly developed and well-developed areas, land plots are the segment in which investors can consider investing. With a long-term vision, resort real estate is still the segment with the greatest advantage and space when in the next 5-10 years, Vietnam's tourism will become competitive and attract world-class tourists.
 

With a long-term vision, resort real estate is still the segment with the greatest advantage and space when in the next 5-10 years, Vietnam's tourism will become competitive and attract world-class tourists.
 

Neil MacGregor - General Director of Savills Vietnam also shared that real estate had been, was and would be the safest and most effective investment channel: “Witnessing and experiencing all the ups and downs, and the development of the market, in the midst of the difficult period of the economy in general during the Covid-19 epidemic, I always have an optimistic view and believe in the recovery of real estate.

The fact of the past 25 years have proved that even during the economic crisis, Vietnam is still among the few countries that have maintained a relatively high growth rate.”

According to Neil MacGregor, Covid-19 would still last until the end of 2020, but the real estate market would soon recover and thrive in the next period from 2021 to 2022, thanks to great and timely determinations of the Government in recent times. This would be an effective support and leverage tool not only for businesses facing difficulties in the real estate sector, but also for the Vietnamese economy in general.

After rain comes sunshine. Experts state that although there are currently many difficulties, with the potentials and development space of the market, along with policy support, we fully believe that the period of 2020 - 2030 will be the a decade of boom in the real estate market.

“In any market, there are both opportunity and risk. The same for the context of the upcoming real estate market, there will be a mixture of difficulties and opportunities. Looking from the experience of crises of the real estate market over the past 10 years, the market has a stable and sustainable development; Credit policies in the real estate sector are moderate and stable, so it can be affirmed that the recovery of the real estate market will be very fast after the end of the epidemic," a real estate expert further emphasized.