Real estate market with mixed signals

Need to adjust macro-policy to limit dephase of the supply and demand dephase. Picture: H. Anh

Real estate still attracts investment

so far, the real estate market in 2017 has had positive signals, this is a field that receives much attention from investors. According to statistics from the Department of Foreign Investment, in the first eight months of 2017, together with the 46 new FDI projects invested in real estate, 15 projects increased capital and 73 capital contribution shares, the total capital that the foreign investors invested in the real estate in Vietnam has reached more than $ 1.1 billion, the real estate is the fourth largest sector in the fields which are invested capital by the foreign investors . This has also contributed to making the real estate rank the second about attracting source of foreign investment in the past 30 years, just after manufacturing.

The real estate not only received the attention of foreign investors but also is the sector with the highest percentage of newly established companies in the first eight months. There are nearly 3,200 newly established real estate companies, up 65.8% over the same period last year.

However, Le Hoang Chau, chairman of the HCM City Real Estate Association noted, the real estate developers set up a new increase, but most of the businesses in the brokerage sector. Explaining this, Chau said that the establishment of brokers is more due to this field which people can quickly earn more through the real estate trade rather than other projects of investment development, because investment may take 3-5 years to be able to get benefits. However, Mr. Chau noted that in the past time, many brokers were not professional, overwhelming the real estate by phone calls and disclosing the information of the product is not complete and accurate ... Many brokerage companies are allowed to sell prices higher than the agreed price by the head investor, which has made the transparency of the information provided by brokerage firms is not complete. Consumers find it difficult to access standardized information excepting some companies that are the professional brokers who have strategies and solutions, but this number of the enterprise is not much. There are many small brokerage firms not having professional activities and this leading to have a big influence on the market.

At this time, the general information on the real estate market in the third quarter has not been announced, however, in the first half of the year, Vietnam Real Estate Association said the real estate market in the following quarter increased slightly compared with the previous quarter. The good projects of the reputable developers are still sold well in the market. In addition, many facilities, available infrastructure or the ability to take advantage of the express buses(BRT), or MRT rail are also high. In the first half of 2017, in Hanoi, Da Nang, Nha Trang, Ho Chi Minh City, the transaction was up 13.7% compared to the first quarter of the year. while in HCM City and Hanoi mid-end apartments still, occupy the largest transactions. For example, mid-end projects occupy the majority of supply in the Hanoi market with many real estate projects being offered such as T & T Riverview, Viet Hung Green Park, Ecolake View, Imperial Plaza, An Binh City, FLC West Mom, Gelexia Riverside, Riverside Garden ...

However, if the analysis of transaction numbers is paradoxical, the volume of transactions on quarterly basis increases but decreases gradually in months. For example, in April, the whole market sold nearly 5,600 units. In June, this figure was only about 4,700 units, which was in both main markets of Hanoi and Ho Chi Minh City. Le Hoang Chau said that from 2016 until the first eight months of 2017 the market is showing signs of slowing down. Particularly, in 2017, there are two six-month lunar months, of which June leap is still considered as lunar July, so the market almost has two lunar months, coinciding with the third quarter, this has an effect on market psychology.

Need adjustment of macro policy

In addition, Chau also stressed that the slowdown is due to the risk of moisture of the market itself, the product structure is not balanced, the product is not suitable for the money pocket of many households while the source of high-end products is too much. This imbalance is clearly demonstrated in the Hanoi market. According to the Vietnam Real Estate Association, only in the second quarter of 2017, the new supply in Hanoi has more than 6,700 apartments which are opened for sale, but it is worth noting that the market does not have more cheap housing projects and new social housing in Ho Chi Minh City, this was initially improved in the first half of the year. With a total of about 16,500 units of housing projects formed in the future have been qualified for capital mobilization in the past period, the high-grade segment accounted for 31.3%, the middle segment accounted for 31.1 % and the popular segment accounted for 37.6%. Thus, the proportion of affordable apartments accounted for the largest proportion (68.7%) of the total apartment market. According to the HCM City Real Estate Association, this is a good sign because investors and enterprises have restructured their products in the direction of increasing the number of small and medium-sized apartments to meet real demand of middle-income people, low-income urban people, and high liquidity.

Recognizing that the market has to dephase between demand and supply when the supply is in favor of the high-end segment, Nguyen The Diep, Vice President of Hanoi Real Estate Club, said that macroeconomic policies need to be solved and to regulate this issue. Accordingly, the orientation increases credit on the investment projects for apartment segment under 1-2 billion while limiting credit to the high-end segment. When the market needs cheap housing and policies are geared towards supporting this segment, it is desirable or unwilling for the owners to follow this trend, so the most important thing is the regulation of the policy. If you just call and exhort investors to build low-cost generic housing, it will not obtain the results, but policy must be done. Mr. Diep also said that the middle-class segment will be the largest segment, thus encouraging and facilitating this segment, it is worth being worried that low-cost houses are often of low quality, Mr. Diep also recommends not to build low-cost houses with large areas but low quality, but the direction of building small area but good quality should be focused on for people having low or medium income to buy, for example, the house is about 40-50m at a cost of about 1 billion.

According to experts, the market of hotel apartments, serviced apartments, holiday apartments (officetel, condotel ...) are developing strongly, many in the past and are signs. Supply exceeds demand. The condotel rate currently accounts for about 56% of the total supply, which is higher than the hotel room supply (44% of the total) is unusual, while in general condotels are generally lower in condotel supply of hotel rooms and resorts. In addition, that the investor committed profit up to 12% per year in 8-12 years is too high, not ensuring sustainable development, hiding potential risk factor for secondary investors, while The problem that needs to be solved by the State is the legal nature of this type of product because it is not clearly defined in the Housing Law.

Relating to the legal issue of apartments such as condotel, Nguyen The Diep said that the condotel trend is inevitable, especially in the context of the tourism industry in Vietnam is increasing sharply about 20-25% per year and this is the reality that we need to face to handle. Obviously, developers are not eligible to build a hotel for rent but they force to raise funds from customers. If the mechanism is favorable, then both issues will be solved: investors have the capital to build and satisfy the rights and interests of investors, contributing to the development of tourism. Managers must be on the right track to offer timely solutions.