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HOW POST-PANDEMIC REAL ESTATE LIKELY TO FARE?
After the COVID-19 pandemic, real estate in the vicinity of Ho Chi Minh City and projects invested by reputable investors are forecast to attract buyers.
The COVID-19 pandemic outbreak in the past three months has almost frozen the property market in many provinces and cities and largely halted secondary property deals. Particularly, online orders are allowed in suburban apartment projects.
High demand, unchanged prices
Reports by property market research companies show that real estate prices in the suburbs of Ho Chi Minh City have not declined, even increasing sharply during the outbreak of the COVID-19 pandemic. According to DKRA Vietnam, the suburban residential land market continues to take the lead as supplies are short in Ho Chi Minh City for four consecutive quarters. Dong Nai province continues to lead new supplies and new deals in the whole market.
New townhouse and villa supplies in Ho Chi Minh City and neighboring provinces suddenly increased by 78% as compared to the previous quarter but the supplies primarily rolled out in the first and second quarters of 2021. However, sales dropped around 23% over the same period in 2020 due to mandatory social distancing to prevent COVID-19 contagion.
A report from CBRE Vietnam also shows that, from the beginning of 2021, the cash flow into real estate has increased very quickly, especially early in the year. Many provinces even witnessed land frenzies. According to surveys, 75% of respondents wanted to invest in real estate and 35% planned to invest in the stock market before the COVID-19 outbreak.
However, in the last three months, mandatory social distancing to fight the pandemic resulted in a sharp redirection of cash flows into the stock market. There is no sign of property selloffs, especially in localities adjacent to Ho Chi Minh City. This shows that many investors are placing their money in property and waiting for the opportunity to buy real more after the pandemic.
Mr. Vo Huynh Tuan Kiet, Deputy Director, Housing Marketing Head of CBRE Vietnam, said, despite economic difficulty caused by the COVID-19 pandemic, the demand for housing is always high. The more the pandemic spreads, the more strongly people want to own a safe private accommodation.
Besides, for professional investors or high-income earners, when the pandemic occurs, their money cannot flow into manufacturing and consumption channels and they therefore tend to pour money into real estate, which is always considered a safe and sustainable choice in the long run.
Inevitable trend
Associate Professor Nguyen Minh Hoa, Vice Chairman of Ho Chi Minh City Planning and Development Association, said that high-rise buildings and separate houses better prevent COVID-19 infections than densely populated areas with deep narrow alleys at the heart of the city during the social distancing time.
In particular, when the pandemic contagion is becoming more complicated, many people return to their native land outside of Ho Chi Minh City to have a more peaceful and healthy life with their extended families. This will drive up property demands after the pandemic. Let alone, many areas in Ho Chi Minh City no longer have land funds for the time being. In neighboring localities like Dong Nai and Binh Duong, the land fund is still very abundant and the traffic is also increasingly convenient.
Dr. Hoa added, in order to adapt to climate change and sea level rise, Ho Chi Minh City intended to develop the main urban space to the East and North-Northwest. Only these areas have large enough land for investors to carry out creative planning, design large affordable projects to attract more buyers. Then, projects in neighboring localities like Tay Ninh, Dong Nai, Binh Duong and Ba Ria - Vung Tau will draw investors.
Importantly, consumers now tend to prefer spacious residences open to nature to small residences in the downtown, said Mr. Tran Khanh Quang, General Director of Viet An Hoa Real Estate Company, adding that the magnet of downtown property will weaken as a result.
More importantly, primary investors tend to develop large projects to build high-class residences with various added values and high profit margins. Therefore, they will actively direct buyers to such projects.
According to experts, the profit margin of projects in Ho Chi Minh City is currently only about 15%, relative to 30%-40% in other provinces. This explains why many real estate giants in Ho Chi Minh City and other countries are moving away from downtown.
“In my opinion, well-located residences where climate is pleasant, giant projects that are 60-100 km from Ho Chi Minh City invested by reputable investors will entice buyers, even a mild post-COVID-19 frenzy anticipated for a while. Especially, more interests will be placed on products to be delivered in 2023 and applied with flexible payment policies, he added.
Remarking on the appeal of real estate in the vicinity of Ho Chi Minh City, Mr. Vo Huynh Tuan Kiet said that real estate there has never been saturated to date. It may be quicker or slower, depending on drives generated by leading projects. He cited that real estate in Bien Hoa City, Dong Nai province is quite hot when many big developers such as Novaland, Nam Long and Hung Thinh all focus on deploying large urban areas and catch the attention of primary investors and end-buyers to place orders online.
Source: VCCI
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