Bright prospects seen for Vietnam property market
In this article (5)
Economic stability, positive investor sentiment, strong demand, and a diverse range of products are keeping the property market robust. The assumption that Covid-19 would cause the market to slump has proven baseless, and market research aftermarket research shows property prices increasing across the board.
Vietnam’s bright economic prospects and strategies adopted by many major property developers also contribute to the market’s strength.
According to the World Economic Outlook Report, a survey by the International Monetary Fund (IMF), in 2020 Vietnam’s economy grew at 2.4 percent, one of the four highest rates in the world. Its effective anti-epidemic strategy and economic growth are expected to be highlights this year too. Fitch Ratings forecast Vietnam’s GDP to grow at 7.5 percent even of there is a new outbreak.
“Vietnam has well-controlled the pandemic, so we think the economy will recover when domestic demand bounces back,” Sagarika Chandra, head of Vietnam analysis at Fitch Ratings, said.
Nguyen Xuan Thanh, a Fulbright University lecturer and member of the prime minister’s Economic Advisory Group, said the positive investor sentiment despite the Covid-19 crisis is driven by the stable economy and sound financial system.
The belief that everyone would surely get vaccinated this year further strengthens investor sentiment, he said.
“Stocks and real estate are still good investments.”
The market has seen a geographic shift from areas such as HCMC. If in the past the most important southern market was Saigon, it is now its satellites such as Binh Duong, Dong Nai and Long An provinces and others with tourism potential such as Binh Thuan, Ba Ria – Vung Tau and Khanh Hoa.
Bui Nguyen Huyen Trang, senior director for Vietnam at JLL, stressed the importance of property developers in construction and urban planning.
“They must carefully study urban planning to create sustainable value for their large-scale projects.”
During Covid-19 times, businesses with strong foundation, offering a wide range of products towards demand for home ownership would have more opportunities to succeed.
The eastern part of Ho Chi Minh City is forecast to be a property hotspot, when Thu Duc City has been officially established, pushing housing prices in this area to record levels.
“Vietnam has well-controlled the pandemic, so we think the economy will recover when domestic demand bounces back,”
With rapidly improving infrastructure that boosts regional connectivity, satellite towns and tourist cities in Binh Duong, Dong Nai, Ba Ria – Vung Tau, and Binh Thuan are of immense interest to investors.
Terence Alford, director of capital markets and investment services at Colliers Vietnam, said developers tend to search for alternative locations to HCMC to increase value.
They also focus on creating living spaces to not only increase choices for customers but also contribute to improving the quality of life, setting new trends and offering new life experiences.
Novaland, a property developer, has recently released its financial report. In 2020 the company achieved profit after tax of VND3.91 trillion, 7 percent higher than it targeted and up 15.3 percent from 2019.
Total consolidated revenues from sales of units and projects and services were VND8.6 trillion. As of December 31, 2020, Novaland’s total assets were worth VND144.54 trillion, an increase of 60.6 percent from a year earlier.
In 2020 Novaland disbursements were allocated for M&A activities and project development. The company continues to raise funding from reputed financial institutions at home and abroad despite Covid-19, showing the trust in which it is held by partners.
Novaland introduced new products in the last few months of 2020. Despite pandemic impacts, resort real estate projects such as the NovaWorld Phan Thiet and NovaWorld Ho Tram still drew great attraction.
Experts do not foresee the property market crashing this year despite an increase in price levels, but instead expect it to remain strong due to strong demand, economic growth and stability and businesses’ clever strategies.
In a recent report titled ‘Ready for a new cycle from 2021,’ VNDirect Securities Company said Vietnam’s property market has a seven-year cycle.
In 2021 it is getting ready to enter a cycle of high growth amid positive factors such as amendments to the 2020 Construction Law and 2020 Investment Law and a forecast of solid economic growth this year.
“The development of infrastructure and lower mortgage interest rates will have a direct impact on the real estate market. The upward trend in prices will continue due to the growing demand for housing,” VNDirect added.
Questions & Answers
Q.What factors are contributing to the robustness of Vietnam’s property market, despite the Covid-19 pandemic?
What factors are contributing to the robustness of Vietnam’s property market, despite the Covid-19 pandemic?
Economic stability, positive investor sentiment, strong demand, and a diverse range of products are keeping the property market robust. Vietnam’s bright economic prospects and strategies adopted by major property developers also contribute to its strength.
Q.Which areas are seeing a shift in investor interest, moving away from HCMC as the primary southern market?
Which areas are seeing a shift in investor interest, moving away from HCMC as the primary southern market?
Investor interest is shifting to satellite areas such as Binh Duong, Dong Nai, and Long An provinces. Regions with tourism potential like Binh Thuan, Ba Ria, Vung Tau, and Khanh Hoa are also attracting attention.
Q.What is the economic growth forecast for Vietnam this year, according to Fitch Ratings?
What is the economic growth forecast for Vietnam this year, according to Fitch Ratings?
Fitch Ratings forecasts Vietnam’s GDP to grow at 7.5 percent this year, even if there is a new outbreak. The country's effective anti-epidemic strategy and economic growth are expected to be highlights.
Q.How did Novaland perform financially in 2020, based on its recently released financial report?
How did Novaland perform financially in 2020, based on its recently released financial report?
Novaland achieved a profit after tax of VND3.91 trillion in 2020, which was 7 percent higher than its target and up 15.3 percent from 2019. Its total assets were worth VND144.54 trillion, increasing by 60.6 percent from the previous year.
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