The real estate market remains an attractive investment channel

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Real estate experts share real estate investment opportunities at the seminar. Photo T.D

Facing many difficulties and challenges

Amid the global economic fluctuations due to the Covid-19 pandemic, the real estate market has faced many difficulties, and the implementation and launch of many real estate enterprises’ projects have stalled because of the pandemic.

Nguyen Thi Van Khanh, Senior Director of JLL Capital Markets, said in the first six months of 2020, total supply of apartments for sale on the HCM City market was about 6,000 units, much lower than the same period last year and the lowest figure in the past five years (down 29%). It is forecast that in the last six months there will be about 15,000-20,000 apartments for sale, down 31% compared to the same period in 2019.

Townhouses always attract investors and buyers, with a population of more than 9 million people but limited supply, only more than 1,000 products. This is also why the price of townhouses has increased strongly since 2016, partly because of the limited supply and that newly launched projects have prime locations, easy to move to the centre.

In addition to the pandemic, experts said the real estate market faced many other uncertainties related to policies and supply-demand mismatch. For example, the condotel segment was considered a favourite trend of developers some years ago. However, many investors have failed to fulfill their investment commitments, sparking fear of investors. There were also some legal issues in sub-divided plots for sale segment.

However, according to experts, the difficult situation of the economy is also an opportunity for the real estate market to enter a new healthier stage of more stable development. The market has a chance to be restructured, more suitable products will be born, and stronger investors will thrive. In the long term, the Vietnamese real estate has great potential for growth and attracts a lot of investment from foreign investors. Therefore, real estate is still considered an attractive investment channel for many businesses and investors.

Attractive investment channel

According to Nguyen Thi Van Khanh, the real estate market has many support factors from the macro economy, interest rates to support businesses, including real estate firms.

Additionally, FDI inflows into real estate are ranked fourth, behind manufacturing and basic industries such as electricity. In 2020, the most notable M&A of residential real estate was Mitsubishi Group and Nomura Real Estate Co., Ltd., who bought 80% of shares in phase 2 of the Grand Park project, District 9, HCM City.

According to Vo Huynh Tuan Kiet, director of CBRE Vietnam's housing division, surfing investors certainly faced difficulties in the past when output was affected. This trend also appeared for investors, only investors with stable capital and reasonable management structures could survive. In fact, many big investors expand their investment in Binh Duong, Long An, and Dong Nai markets. Many developers even offer financial assistance methods to attract buyers because they have prepared.

The overall average land price has not decreased so project developers cannot reduce their selling prices. Despite the prolonged pandemic, projects have high absorption; many apartment projects reached about 70% in the first sale.

Sharing the same point of view, Tran Khanh Quang, General Director of Viet An Hoa Company, said although the pandemic had left a heavy impact on the real estate market, its prices in some segments, such as apartments, still increased (up 28% year-on-year) as professional investors have a long-term plan along with the State's good control of the pandemic, so the real estate market remains stable.

This showed the real estate market is currently difficult but opportunity lies in danger. Vietnam is a country that controls the pandemic well. The trend of moving the world's factories to Vietnam is increasingly visible. Besides, interest rates are lower and lower. This is beneficial for all business to regain a steady state. People's consumption will increase. This is a good time for individuals to purchase the right property.