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YEAR-END PROPERTY MARKET TREND: POSITIVE SHIFT TOWARD MORE SUSTAINABILITY
Vietnam’s real estate market will positively shift toward more sustainability from now until the end of 2019, according to real estate experts. However, tightening property credits by the banking system will make investors more cautious, resulting in more selective development.
Mr. Nguyen Tran Nam, former Deputy Minister of Construction and Chairman of the Vietnam Real Estate Association, said that high demand is a point of advantage of the real estate market for the time being, making liquidity high at all segments. According to United Nations statistics, in developing countries, people having an income of US$1,000 - 10,000, have a huge demand for housing and Vietnam is in this range.
He said, in the medium and long term, Vietnam's real estate market will be still in a very good shape and urbanization speed is still quick. It is estimated that about 1 million people move from the countryside to cities each year. Most people will still save money to buy houses.
However, currently, the market supply is showing signs of decline. According to statistics, in Ho Chi Minh City, construction permits decreased by 16% and 150 projects have been suspended for inspection and review. Mr. Nam cited a report by the Vietnam Association of Realtors as saying that condominium and villa apartment supplies in Hanoi and Ho Chi Minh City showed a clear sign of decrease, to only 70% of the supply in the fourth quarter of 2018.
Remarking on the property market trend, he added that the residential land segment attracted great attention from investors since the beginning of the year. Land prices in Mui Ne, Da Nang, Van Don escalated as investors have focused on buying land. Investing one dong in land will result in 2.5 dong investment in construction materials and thousands of other consumer items, he said, explaining that buying land is seen as a way to “bury money” into land. For that reason, we should not buy land but houses.
Assessing the real estate market in the coming time, Mr. Tran Kim Chung, Deputy Director of the Central Institute for Economic Management (CIEM), said that there are three scenarios for the real estate market in the remaining months of 2019.
In the first scenario, without macro-policy impacts, the market will move down marginally.
In the second scenario, three segments will emerge toward the end of the year: industrial property, upmarket property and affordable property for rent.
In the third scenario, negative impacts of the world economy and its impacts on Vietnam will slow down macro-economic development, resulting in a slump of the real estate market.
“I think that Vietnam's economy will continue to grow steadily this year, which will make the real estate market more stable but it will not generate enough momentum for strong development,” he said.
Market developments indicated an increase in supply towards the year’s end after a time of short supply because new projects have not been launched, especially in Ho Chi Minh City.
In the east of Ho Chi Minh City, a series of projects are under construction in 2019, including Rome by Diamond Lotus invested by Phuc Khang Corp in a densely trafficked areas linked to many important places. In the coming time, a station of the second metro railway will be placed here. The project is advised by DKRA Vietnam for marketing and distribution. Buyers only need to pay 10% in the first payment installment and 50% of the property value at the time of getting the key.
Besides Phuc Khang's project, the South Saigon area also has the 14.36-ha Eco Green Saigon Project situated in a favorable location on Nguyen Van Linh Street, District 7. Currently, the project is selling its property from VND2.3 billion apiece.
GS Nha Be Development Co., Ltd is preparing to start construction of a 350-ha project. This project has been suspended for a relatively long time. This project will supply various types of houses, villas, condos, low-rise apartments, high-rise apartments and complex houses.
In the coming time, Ho Chi Minh City will have more new projects. Recently, the city re-licensed 124 real estate projects out of a total of 150 projects under inspection of public land trading. In addition, the city has announced to permit 160 new real estate projects for construction in 2016-2020. This is expected to bring a plentiful supply for the real estate market in the following years.
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