Last week the Vietnamese Real Estate Association (VNREA) held its annual forum and Nguyen Tran Nam, Chairman of the VNREA said that during the last three years, the Vietnamese real estate market has been in a period of stable development, that risks have been reduced significantly and that the real estate industry has had a positive influence on the economy that has led to the support of other industries.
Nguyen said in his remarks that 2019 has seen many complicated international and regional fluctuations that have decreased the revenues and profits of listed businesses. At the same time, many small real estate companies that have utilized bank loans have seen the government tighten credit lines, which is creating problems for them. At the same time, there has been recent negative publicity about condotels and officetels and the government needs to create transparent rules and regulations about these segments.
Based upon its current market assessment, the VNREA forecasts difficulties for the real estate market and the market downtrend in Hanoi and Ho Chi Minh City this year is expected to continue.
Based upon it’s analysis, the VNREA sees five trends in the market:
|1.||The market is still stable, thanks to positive macroeconomic signals.|
|2.||The demand for housing is still large. As Southeast Asia’s third-ranking country, urban areas show the highest demand for housing every segment, including apartments, offices, hotels, and commercial buildings.|
|3.||There remains empty room for tourism real estate, resorts, and industrial real estate, which are considered a light spot of the market in the medium and long term. The VNREA forecasts that Vietnam will need thousands of new hotel rooms to meet future domestic and international tourism projections.|
Industrial real estate is also developing rapidly because Vietnam has been one of the most attractive destinations in Southeast Asia for manufacturing companies and industrial real estate will develop significantly in the short, medium and long term periods if the government issues more encouraging policies.
|4.||Foreign direct investment (FDI) into real estate is increasing. According to the Ministry of Planning and Investment’s Foreign Investment Agency, total registered FDI capital was $29.11 billion, up 4.3% this year, with estate ranked second with total investment of $2.98 billion, 10.2 % of the FDI total.|
|5.||Infrastructure has been developing well over the past decade and total infrastructure investment has exceeded 10% of GDP, surpassing most Southeast Asian economies. In the last seven years (2012-2019), the country has built an additional 838km of highways, which is a key motivation for socioeconomic development.|