REAL ESTATE MARKET: SEVERAL POSITIVE SIGNS IN Q2

The Vietnam Real Estate Association (VNREA) said that since banks raised long-term deposit rates (through certificates of deposit), lending rates have been placed under growing upward pressures. This may adversely affect the real estate market. However, the second quarter is expected to witness better performance.

Deals fall in Q1

A VNREA report showed that foreign investment flows continued to be channelled into the property market in the first quarter of 2017. The property industry was the second biggest recipient of foreign funds.

Accordingly, foreign investors registered to invest US$7.71 billion in the first quarter, up 77.6 per cent year on year. March witnessed a surge in FDI flows with US$4.83 billion, up 691.8 per cent over February and up 503.75 per cent over March 2016. The skyrocketing growth in March showed strong foreign interests in Vietnam’s growth potential although it lost the chance with Trans-Pacific Partnership (TPP).

According to VNREA, the manufacturing industry got the biggest FDI value with US$6.55 billion in the period, accounting for 84.9 per cent of total registered value, followed by the property industry with US$340 million or 4.5 per cent of the total. The biggest property project in the quarter was Vietnam-Singapore Industrial Park III in Binh Duong province, invested by Vietnam-Singapore Industrial Park JV Ltd (VSIP).

According to statistics provided by VNREA-member real estate exchanges, in the first quarter, successful real estate deals dropped from the fourth quarter of 2016 and from the same period of 2016.

In Ho Chi Minh City, upmarket apartments were sold slowly. In Ha Noi, apartment transactions remained stable. Da Nang City saw active deals in residential ground (more than 1,000 deals in the quarter). Successful transactions (housing, land and resort property) recorded 18,338 in the first quarter. HCM City accounted for the largest share of mid-market apartments while Hanoi had more affordable apartment deals than mid-market property deals. Residential land transactions were most active in Da Nang City.

VNREA attributed the decline to the break period for the Lunar New Year holidays which fell in February. In March, more deals were reached. In general, the supply of budget apartments, condotels and middle-end apartments stayed stable while the luxury apartment segment showed signs of slowing down.

Investors continued to launch attractive promotion programmes to catch the attention and interest of buyers in the first three months.

Mid-market deals fare well

The world economy is forecast to stage the recovery trend, evidenced by better trade performance in the past time. World oil prices are on the upward trend and the FED is likely to raise interest rates for the second time this year in June.

In Vietnam, on the macro level, the Government is speeding up the economic restructuring, especially reshuffling State-owned enterprises and dealing with bad debts. At the same time, the property market will continue to keep the upward trend from 2016. More supplies will be made public in the coming time. VNREA forecast that the second quarter trading will be better than in the first quarter.

According to VNREA, property deals fell during the Lunar New Year holidays as usual. Some property projects developed by famous brands like Vingroup and Eurowindow will launch a lot of mid-market products of high demand.

However, the association also noted that after banks raised long-term deposit rates (through certificates of deposit), lending rates have been placed under growing upward pressures. This may adversely affect the real estate market.

Mr Nguyen Manh Ha, VNREA Vice President, said, from the housing crisis in 2008-2009 to 2016, investors did not speculate residential land but this tended to re-emerged recently, with more land deals reached. Many have bought land and apartments for sub-lease while some others waited for higher prices.

He is optimistic about the market outlook and this good sign shows that the investor confidence has returned on the real estate market.

Source: VCCI