Vietnam's property market to stay intact despite Covid-19 impacts
After a long period of social distancing, people would prioritize shopping or tourism instead of buying properties.
Real estate experts told The Hanoi Times the local market is set to stand firm and recover despite the severe impacts of the Covid-19 pandemic.
|Real estate expert Phuc Le. Photos: The Hanoi Times|
How do you see the current situation of the real estate market during the current fourth Covid-19 outbreak?
Real estate expert Phuc Le: While vaccination is seen as the key solution for Vietnam to fully control the pandemic, herd immunity could only be achieved when at least 70-80% of the population are vaccinated. Therefore, I think the market could only recover by late November at the latest, as people’s lives are returning to normal.
But even when the pandemic is contained, the chance for a market breakthrough would be slim, because, after a long period of social distancing, people would prioritize shopping or tourism instead of buying properties.
Chairman of BHS Group Nguyen Tho Tuyen: The real estate market has somewhat stagnated even before the emergence of the Covid-19 pandemic. For the past two years, the situation has turned worse. Due to a prolonged pandemic, enterprises are under severe stress to keep their business running.
However, even during this difficult time, there is no doubt that the market would recover, especially when the macro-economic situation remains bright as the Government expects a GDP growth of 6% for this year.
Meanwhile, the Government has identified public investment as a key solution to boost growth. A better infrastructure system, therefore, could also be seen as welcoming news for the real estate market for further development in the coming time.
Another key factor to support the market came from the new legal mechanisms, including recent regulations to issue land use rights certificates for condotel, or the Ministry of Natural Resources and Environment (MARD) easing regulations for the sale of land plots in suburban areas of Hanoi and Ho Chi Minh City.
|Chairman of BHS Group Nguyen Tho Tuyen.|
What would be the market tendency at the moment?
Real estate expert Phuc Le: Amid severe economic impacts, there remain spotlights in the real estate market. For instance, demands for industrial properties continue to rise in 2020 and early 2021. However, foreign companies may withdraw a part of their operation in Vietnam in case the pandemic situation remains unchanged.
Meanwhile, resort properties in coastal provinces/cities may continue to face difficulties due to large supplies for the past few years. On the contrary, the number of foreign tourists coming to Vietnam for the past two years has been on a sharp decline, while domestic tourists could not make up for such losses from foreign revenue.
Many hotels that have been closed for a long period would need significant investment before being able to reopen again.
I notice there has been a growing interest in resorts in mountainous areas, which have not been much affected by the pandemic compared to those in coastal regions. For example, during the national holiday of April 30-May 1, the occupancy rate at resorts in coastal areas stayed around 50-70%, but those in Sapa, Lao Cai, or Da Lat were almost full.
The pandemic is making people change their mindset with a more focus on health issues, so many are turning into resorts in mountainous regions, and this could be an option for investors in the future.
On the other hand, people are also looking for a second home as a long-term investment, especially as work-from-home has been a new trend and many want to live in a green environment.
What are your suggestions for both real estate developers and investors at the moment?
Chairman of BHS Group Nguyen Tho Tuyen: The market is far from being collapsed in the coming time, but would experience substantial changes for a stronger development phase.
The Government should ensure a healthy and stable environment for market growth by addressing concerns from a possible price bubble or rising inflation.
For investors of real estate projects, those that are having a large number of land resources and could meet the long-term demands of buyers are set to become winners.
Real estate expert Phuc Le: Safety should be the utmost priority for any investors when making a purchase decision during or after the pandemic.
The clear legal status of a real estate project would help investors reduce their risks. So the rule of thumb is to go for credible real estate developers with strong financial capabilities.
Investors should also be aware of the fact that not many real estate investments could be profitable in short term, so they should think twice before using financial leverage for investment.
Thank you for your time!
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