Major trends of the real estate market in the second half of 2019

	Numerous real estate companies owing in taxes and fees
	Limited supply hits real estate market
	Credit for real estate to be under stricter control

Resort real estate continues to benefit in the future. In the photo: Panorama of InterContinental DaNang Sun Peninsula. Photo: ST.

Many segments continue to witnesshigh demand

Vietnam is one of region’s real estate hotspotsin 2019. With great potential, macroeconomic prospects and continuous investment in infrastructure, Vietnam's real estate market is growing strongly in many different segments. Regarding thetrends in 2019, Mr. Matthew Powell, Director of Savills Hanoi, said that the housing market is developing strongly, supported by the rapid growth of the middle class, strong speedofurbanization, and the highest rental yield in the region.

According to real estate experts, the strongest point in the housing segment in Vietnam is the huge demand and liquidity. According to statistics from the United Nations, countries with an average income of 1,000-10,000 USD often buy houses and Vietnam is in that range.

The speed of urbanization in Vietnam is still very high. According to calculations, there is an average of 1 million people a year moving from rural areas to urban areas and they like to save money to buy houses. It is important to provide for this demand in a quality way.

Besides the housing segment, office for lease is also a significant development trend and maintainingthe heat in the market. According to Matthew Powell, the office rental market in Hanoi and Ho Chi Minh City still holds the position as one of the most attractive real estate segments in the region. With a record high rental capacity, limited new supply and a large demand for rent have contributed to the attractive growth of rents.

"We expect investment demand in the office segment to remain high when the market continues to grow," said Powell.

The resort real estate market is also benefiting from strong growth in the number of domestic and foreign tourists, as well as the growth in the number of international direct flights. It isnot surprising that hotel segment investors are pouring money into the Vietnamese market – a future hotspot in the region. Despite acknowledging that in the first half of 2019, resort real estate was quiet with few open projects to sell instead from the beginning of the year, investors tend to look for land and house projects in big cities.

Mr. Duong DucHien, Director of Housing, Savills, North & Central Division, affirmed that the potential of Vietnam real estate is still very large, especially with the coastline equal to the length of the country.

Mr. Duong DucHien said that since the APEC Conference 2017, there has been a wave of investors who are individuals from other countries in the region, even from Western Europe and the United States,seeking opportunities for investment in Vietnam, of which Chinese investors occupied a large amount.

“Recently we recorded Chinese investors buying a huge amount of condotels then reselling them to their countries through their distribution units. This is also considered a linkage to attract foreign investors to Vietnam. Overall, we are still attracting a lot of investors. For example, in the south of Hoi An (Quang Nam), there are many resort projects with investment value up to hundreds of millions of USD per project. For potential investors, I think that when they are interested in investing in a country, in addition to seeing great potential, they themselves have acquired a certain number of customers in Vietnam before investing here,”said Mr. Duong DucHien.

Industrial real estate continues to benefit

According to experts, in addition to the residential and resort real estate, industrial real estatewill continue to be a prominent segment in the real estate market this year. This is driven by foreign direct investment capital pouring into the productionindustry, improved infrastructure and competitive prospects when compared to other countries in the region. This is one of the segments with the biggest M&A activities in 2019.

The trade war between the US and China has not shown signs of cooling, which is the reason why FDI capital into Vietnam has increased sharply and is expected to continue to rise in the future.This is the basis for industrial property to become the focus of the market.

Mr. Nguyen Manh Ha, Vice Chairman of Vietnam Real Estate Association said that this is also a positive factor to help the real estate market continue to grow stably.

"The impact of the US-China trade war creates a wave of shifting production facilities to Vietnam that helps the industrial property market grow, accompanied by housing and service facilities for the employees and workers in industrial zones will have the opportunity to develop,”said MrNguyen Manh Ha.

Besides the above positive trends, Mr. Nguyen Tran Nam, former Deputy Minister of Construction, said there are two trends of non-active investment in the real estate market. The first is the phenomenon of investing in massively buying land, causing high demand in the areas of Mui Ne, Van Don and PhuQuoc. Secondly, investors tend to divert real estate investment in localities, particularly in coastal provinces and cities such as HaiPhong, QuangNinh and Da Nang.

According to Mr. Nguyen Tran Nam,in these areas land is cheap and procedures are easy, but localities still have large agricultural development, so businesses need to assess and anticipate difficulties in business strategy.