Foreigners’ housing demand is increasing in Vietnam’s domestic property market

Construction News Vietnam
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Foreigners’ housing demand is increasing in Vietnam’s domestic property market

The domestic real estate market is hoped to have growth in the fourth quarter of this year and before the Lunar New Year 2021 if, by this year-end, the domestic economy is restored to levels from before the COVID-19 pandemic.

This is the most positive scenario forecast by Trần Kim Chung, deputy director of the Central Institute for Economic Management, about the real estate market this year.

However, in the second and more likely scenario, the domestic and global economies will recover only gradually and the local real estate market will be quiet but not collapse.

In the worst scenario, Chung said the market would freeze and trading would stop due to the domestic economy facing many difficulties in the context of an uncontrolled pandemic and unsatisfactory global economy.

Chung also said agricultural real estate was still looking for measures to develop because of a lack of mechanisms, policies and products to develop the market.

Meanwhile, housing real estate market had three segments attracting customers, including land plots in suburban areas, affordable housing and social housing, Chung said. The high-end housing segment needed new drivers.

Trang Bùi, JLL Vietnam’s market director, said the housing market was expected to have stable growth due to housing demand. Mid-price housing products consistent with the financial ability of the majority of customers would lead the market in the long term. Investors and customers who have real demand would seek finished housing products.

Lê Hoàng Châu, chairman of the HCM City Real Estate Association (HoREA), said in the coming years, the domestic market would still have high demand for affordable apartments while the supply of this segment was limited at present.

Therefore, to have sustainable development on the domestic property market, there is a need for more investment in the affordable apartment segment, according to Châu.

This kind of property attracts many customers and investors, especially middle- and low-income people and workers in big urban areas. Affordable apartments also have high liquidity.

Foreigners’ housing demand is increasing in the domestic property market. Nguyễn Đức Thêm, Project Sales Manager, Savills Vietnam, told Việt Nam News.

“Currently, the demand for real estate of foreigners in Việt Nam is concentrated mainly in big cities such as Hà Nội and HCM City. Recently, many projects immediately sold out the quota for foreigners right at the first phase of sale,” he said.

“Foreigners have also targeted cities and provinces such as Đà Nẵng, Nha Trang or Quảng Ninh. The types of customers have also enlarged.”

Previously, most foreigners who bought real estate here were those who had stable jobs and planned to live permanently in Việt Nam, Thêm said. But in recent years, many foreigners had bought real estate as an investment. They usually came from Japan, South Korea, Taiwan, Hong Kong or mainland China.

According to the Việt Nam Association of Real Estate Brokers, the property market will adjust soon and investors will have to calculate carefully and distribute capital more appropriately.

At present, land plots are still the first choice of investors in the localities developing property market. Small-sized land plots would be very attractive products, according to the association.

Chung has recommended the State organise land auctions for all kinds of property projects and strengthen inspections of land use in all projects nationwide.

The State needs to complete a legal framework for the condotel and officetel market, including land use rights certificates, requirements for construction, management and contract, and sanctions in building, trading, operating condotels and officetels.

In addition, there must be sanctions for property projects being constructed slowly to avoid land going unused.

The State should create land areas with available infrastructure in planned regions to welcome new foreign investment, especially enterprises and large investors, Chung said.

According to Savills Vietnam, many investors are looking for land areas of 500 to 1,000 hectares to invest in industrial parks. They have paid attention to big provinces and cities so Hà Nội, HCM City, Long An, Bình Dương and Đồng Nai are forecast to have opportunities in industrial property.

Property experts said the available land areas for investment in big cities like Hà Nội and HCM City had reduced so real estate businesses continue to seek land in other provinces and cities, especially localities with advantages in the development of tourism and the economy, reported

Many property developers choose provinces to build new urban areas because of favourable bidding procedures and shorter investment cycles than urban projects in big cities.

In the next few years, this trend would develop in many provinces such as Bình Phước, Long An, Bình Dương, Đồng Nai, Bà Rịa-Vũng Tàu and Bình Thuận, according to experts.

— This story was originally posted on Vietnam News