Vietnam's real estate market is suffering from the negative impact of the Covid-19 pandemic. Real estate is one of the industries that are heavily affected by the fourth outbreak in the country. The real estate market in many provinces and cities was almost frozen. Most activities related to secondary real estate transactions, etc., could not take place. However, since the beginning of the fourth quarter of 2021, when Ho Chi Minh City and some southern provinces began to relax social distancing, the real estate market started to show signs of warming. Many foreign enterprises invest capital in Vietnam's real estate sector through M&A deals.
According to data from the Ministry of Planning and Investment, FDI into Vietnam in the first nine months of 2021 increased by 4.4% to approximately 22.15 billion USD over the same period last year. M&A activities in the real estate sector are quite active. For example, Aseana Properties Ltd. sold a stake in City International Hospital to a joint venture partner for a total value of approximately 95 million USD. Ascott Corporation Ltd. (Capitaland) acquired a complex of 364 apartments in Somerset Metropolitan West Hanoi for about 93 million USD.
Real estate in Vietnam still has a lot of potential for development in the coming time. Vietnam has been and is an attractive destination for real estate investors in the world. The growing middle and upper class will continue to drive housing demand across Vietnam, which will be further supported by urbanization and a gradual decline in the number of traditional multi-generational households. In addition, investment in infrastructure is also a very important factor to open up new markets to satisfy the ever-increasing demand for real estate investment of the growing middle class in Viet Nam.
According to Mr. David Jackson, General Director of Colliers Vietnam, in Ho Chi Minh City, the supply of residential real estate is likely to be significantly improved. New projects in the mid-end segment will mainly locate in the East and suburban districts. The central land fund will be prioritized for the development of luxury and high-end housing projects. Housing prices are expected to maintain an average growth momentum of 3-7% in 2022 across segments.
Meanwhile, in Hanoi, the suburban areas grant great land banks for new real estate projects, providing abundant new real estate supply. The strength of the Hanoi housing market is the strongly developed infrastructure system, increasing the connection between the central and the surrounding areas. Real estate prices in Hanoi are not as volatile as in Ho Chi Minh City, but prices still increase year by year at 1-3%.
A representative of the Vietnam Real Estate Association also added that industrial real estate is the bright spot of the market. The demand for worker housing near the industrial park is also an urgent need after the consequences of the pandemic.
Vietnam aims to turn tourism into a spearhead economic sector, striving to attract at least 35 million international and 120 million domestic visitors by 2025, total revenue from tourists reaching about 80 billion USD, with an average growth rate of 13-14%/year. Therefore, the demand for tourism real estate will have a lot of room for development.
The Covid-19 pandemic has been having a negative impact on the entire economy, in which resort real estate has been hit the hardest and almost paralyzed during the past two years.
Statistics of the Vietnam Association Of Real Estate Brokers showed that, in 2020, the whole resort real estate market only consumed about 120 products. At the start of the third quarter of 2021, the situation has improved significantly. The number of products offered for sale on the market in the third quarter of 2021 reached 7,206 products, and transactions reached 2,280 products. Equivalent to 31.6% absorption rate. Some provinces that have recorded products for sale include Quang Ninh, Thanh Hoa, Da Nang, Quang Nam, Phu Yen, Khanh Hoa, Binh Thuan, Phu Quoc, etc.
In the fourth quarter of 2021, the market is expected to recover thanks to the pandemic situation in most provinces basically under control, and the vaccination rate is also high, with 97 million injections nationwide as of November 12th. Resort real estate is associated with tourism demand, so once the pandemic is controlled, in addition to a 100% vaccination rate, the tourism industry will bounce back, creating a good opportunity for the real estate market to burgeon.
Compiled by VietnamCredit
