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Industry forecast: Vietnam real estate 2020

Industry forecast: Vietnam real estate 2020

Tuesday 07, 04 2020
Housing real estate prices are still rising slightly, depending mainly on the location of the project.

Vietnam's real estate market is forecasted to be more stable in 2020.

According to economist, PhD. Nguyen Minh Phong, there will be a huge disparity between demand and supply in the housing segment.

All segments are growing

Most segments of the real estate market are still in the general growth phase, with increasingly diversified product structure, which is a direct and interdisciplinary source of motivation spreading positive support for increasing general socio-economic growth.

In areas with synchronous traffic and clean environment, real estate transactions are more successful and vibrant. Supply and demand for office space will continue to increase. Commercial housing and resort tourism are two thriving segments. The situation of "ghost" urban areas and abandoned residential areas, according to Mr. Phong, will be improved thanks to different and more attractive products to increase liquidity and profitability.

The development of transport infrastructure to the outskirts will make the suburban housing market more and more attractive. “Potential customers in this segment are extended families, having many children and owning their own cars, with specific requirements for a clean & quiet environment, cultural space, and good transportation and infrastructure services” said Mr. Phong.

In addition, real estate demand for small and medium-sized enterprises for office and production - business activities will also increase, and increase faster than supply. The real estate market in the coming years will witness fierce competition between different types of real estate, including retail space, which is the selling point, chain of stores ...

>> Related: Overview of Vietnam real estate 2019

For office leasing, Mr. Phong said that buildings with beautiful terrain, comfort, high usability, effective management, safety and most importantly, adequate parking are most concerned by customers. Therefore, office buildings with all the above factors and reasonable prices will be popular.

In contrast, high-priced buildings are often not interested by customers. Besides favorable terrain, other factors such as the central system, electricity and water systems, air conditioners, elevators ... also greatly influence customers' decisions.

In the next 3-5 years, in Hanoi and Ho Chi Minh City, the affordable housing segment will be in short supply, especially affordable rental housing to serve the needs of middle- and low-income earners. “Meanwhile, the demand for affordable housing is always high. The affordable housing segment will still lack development resources, ensuring only 20% of the supply. This is a great tragedy in developing the housing real estate market” Phong said.

Housing prices: slight increase

Housing real estate prices are still rising slightly, depending mainly on the location of the project. Payment methods for real estate will be more diverse and flexible. In particular, the demand and the most powerful development motivation is the social housing segment priced below VND 12-13 million / m2. This segment creates a diverse product system in terms of area, price and architecture, utilities, meeting the real needs of the majority of middle- low-income citizens.

The high-end real estate market segment priced at around VND 30-40 million / m2 including high-end urban apartments and resort real estate, green real estate, environmentally friendly, etc are new requirements of consumers. This segment will increasingly have a high proportion of the total transaction value in the real estate market.

Industry forecast: Vietnam real estate 2020

"The increasing demand for comfortable and high-class living spaces of people is the impetus for developing this type of apartments, attracting more and more customers and real estate investors" Mr. Phong said.

In particular, investment capital in the real estate market is increasing, from localities outside the city and from abroad. In areas around the projected roads, there will continue to be “fevers” of buying and selling land and real estate.

>>> Keep Reading: Directing Credit Toward Real Estate Projects

Besides, with the policy of allowing foreigners to buy houses in Vietnam, the real estate market will continue to record a huge number of foreign customers. After five years of pilot implementation, there have been 2,000 foreigners registering to own houses in Vietnam. If this policy is implemented smoothly and effectively, this will also be an important driving force to help Vietnam's real estate market develop.

Potential risks

According to Mr. Phong, although the operation will be more organized, transparent and professional, there are still many risks in the real estate market which are the supply-demand gap, speculation, virtual prices and the tendency to focus credit on a number of large corporations investing in the high-end real estate and resort segments. The overload of social infrastructure in urban districts, especially in many densely populated areas and new real estate projects, will be more and more intense.

There are more apartments towards the city center, leading to traffic congestion, air pollution, making the lives of residents degraded. There will be disputes between investors and customers about the progress, time of handover, common ownership - private, how to manage the building, etc.

Under this situation, according to this expert, enterprises specializing in real estate management and exploitation, especially high-class apartments and real estate, will become more popular and operate more professionally, gradually replacing self-management and spontaneous management unit model.

​>>> Real estate industry forecast: Difficulties in 2020


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