PROPERTY MARKET 2018: GREAT OPPORTUNITY FOR BUSINESSES

Driven by growth momentum of the property market in 2017 and coupled with the miraculous rally of the stock market, the property market will continue a positive prospect for 2018. Particularly, in 2018, the Government will complete mechanisms, characteristics and development orientations for three special administrative economic zones - Van Don (Quang Ninh province), Van Phong (Khanh Hoa province) and Phu Quoc (Kien Giang province) in addition to the adoption of specific mechanism for the economic development of Ho Chi Minh City.

2017 saw a robust revival of many real estate companies in Hanoi and Ho Chi Minh City, and a resumption of a series of long inactive projects. Housing and land prices surged, particularly in Ho Chi Minh City, where some places like District 2 and District 9 underwent price fevers.

Real deals

According to statistics from the Housing Management and Real Estate Market Department under the Ministry of Construction, Ho Chi Minh City and Hanoi alone had 3,000 successful property deals as of the year. Despite lower growth than in 2016, deals concluded in 2017 were made by end buyers while speculation prevailed in 2016.

Policies that support the sustainable development of the property market also became more flexible and reasonable with the market and this helped draw more foreign investors. From 2009 to 2015, only 126 foreign investors were given house ownership certificates, commonly called red books, but the number has jumped to over 2,000 since the enforcement of the Housing Law of 2014 to date. The number of foreign buyers is sharply rising.

Foreign investors make presence in the Vietnamese property market by entering mergers and acquisitions (M&As) deals. According to consulting firm JLL Vietnam, property M&A deals amounted to US$1.5 billion last year. For example, Warburg Pincus Investment Fund established a US$300 million joint venture with VinaCapital to invest in resorts and hotels. Soon after, Warburg Pincus acquired Serenity Holding, a hotel management company, or purchased a 50 per cent stake in Sofitel Legend Metropole Hanoi Hotel.

Mr Phan Xuan Can, Chairman of the Board of Directors of SohoVietnam Real Estate Consulting Company, which specialises in property M&As and project transfer, said, announced M&A deals in the real estate sector are just the tip of the iceberg, and many deals are not disclosed. The value of announced property M&A deals accounted for just 20 - 30 per cent of the real value.

In addition, foreign investors invested US$2.5 billion in property projects in 2017, accounting for 7.6 per cent of total registered FDI capital.

FDI into property will rise sharply

Dr Vu Dinh Anh forecast that, based on domestic macro-economic factors and more accommodating investor support policies, FDI flows into the property market will increase strongly in 2018. Over the next five years, the real estate market will continue to attract over US$3 billion of FDI capital each year.

According to experts, the real estate market will be more diverse in 2018, led by low-cost housing. Giving an optimistic view on the real estate market in 2018, Mr Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said that this will be a banner year for the real estate market to grow. Demand and supply will meet in reality. Key buyers will be middle-income and low-income residents in urban areas.

He added that, the property market will see considerable corrections in supply and demand from 2018 to 2020 that will make it more balanced and healthier. Hanoi and Ho Chi Minh City are currently completing a new urban infrastructure system, which will be a great opportunity for businesses to seize opportunities to invest and develop the real estate market in the medium and long term.

With the timely and effective adjustments to State property policies, a property bubble is unlikely in 2018.

Mr Ngo Quang Phuc, Deputy General Director of Himlam Land, said that after a long downturn, many investors have identified and reassessed investment opportunities of the market. Accordingly, many investors have shifted portfolios to middle-class apartment segment, which serves the vast majority of customers. The demand seems to outweigh the supply.

Mr Pham Thanh Hung, Vice President of Cen Group, forecast that the real estate market will have many opportunities in 2018 as this is a banner year for the Vietnamese economy when WTO commitments are fully fulfilled. Thus, a globalisation trend will appear in 2017 - 2018: Vietnamese investors buy houses in foreign countries and foreigners buy houses in Vietnam.

He added that the official globalisation integration of the real estate market will shape a strong and fair game for powerful foreign countries. The Vietnamese market is witnessing a wave of investment from Japan, South Korea, Singapore, China, Germany and the United Kingdom (UK). The participation of foreign investors and rich customers will affect the market, prices, and especially high-end and luxury segments in Vietnam.

Along with positive development signals from the real estate market, many experts said that, to grasp this opportunity, enterprises need to constantly restructure, reform and renovate themselves, build corporate culture, corporate spirit, and fulfil their responsibility to the society and to customers. The Fourth Industrial Revolution, internet of things, artificial intelligence, development trends of green, environment-friendly, safe and convenient real estate projects are new requirements of consumers that investors must meet.

Source: VCCI