As the new coronavirus (Covid-19) spreads to five continents and deals a strong blow to economic activities, many industries in Vietnam are feeling bruises, but the picture is not totally painted with grey, according to two Savills Vietnam executives.
Looking deep into Vietnam’s property market, Troy Griffiths, deputy managing director of Savills Vietnam, commented that healthcare and home deliveries are the net winners while retail and hospitality likely to suffer. Recent examples of Hong Kong retail landlords discounting rents by 40% are unlikely to be needed in Vietnam.
| Troy Griffiths, deputy managing director of Savills Vietnam. Photo courtesy: Savills Vietnam |
“Vietnam was the first country to eliminate SARS and continues to set a strong example in containment. As the sensitivity wanes then a China + 1 model may be pursued for manufacturers, that would result in greater demand for Vietnam industrial space, as corporations seek to mitigate risk and diversify locations,” said Griffiths in a release.
Sharing Troy’s opinion, Nguyen Hong Son, director and head of Advisory Service at Savills Vietnam, reckoned that the effects on the tourism industry caused by the epidemic are significant and yet be quantified. However, actively responding to any scenario as well as being ready to respond when the epidemic is under control will ensure the industry can reduce losses in the short term.
In the long run, with Vietnam successfully controlling diseases, the tourism industry will greatly benefit as the country will be seen as a friendly and safe destination, Son added.
The shift of investment capital in the region will be advantageous for Vietnam in becoming a more attractive investment destination, contributing to promoting economic growth in general and the real estate market in particular, Son commented.
| Vietnam is deemed to be a safe destination for tourists. |
Savills Asia Pacific has released a report on Covid-19, offering an analysis of the impacts the epidemic will have on global economics and the property market. According to experts, there are many unknowns, and each property sectors is responding differently - effects are expected to be both temporary and long-term.
Coming as it has, during a period of trade tension and social unrest, Covid-19 has piled yet more pressure on the local economy and weakened prospects for the local property market. Hardest hit have been the retail and hospitality sectors followed by offices and industrial space while the residential market has not been immune.
According to Vietnam’s Ministry of Planning and Investment, the Covid-19 will hurt a wide range of industries in Vietnam, and has trimmed economic growth projections to less than 6.0%, far below the parliament-mandated 6.8% target for this year.
Fitch Solutions has also revised down its 2020 growth forecast for Vietnam to 6.3%.
However, Prime Minister Nguyen Xuan Phuc has reaffirmed that the epidemic will put his cabinet to the test, but it’s not the time to lower socio-economic goals yet.
