Top 10 reputable real estate firms in 2020
Thursday 04, 06 2020
On 28th May, the Vietnam Report Joint Stock Company published the list of top 10 reputable real estate firms in 2020, including familiar names such as Vinhomes Joint Stock Company (Vingroup Corporations), Novaland, Ecopark, Phu My Hung development limited liability company, Dat Xanh Corp. Joint Stock Company, etc.
The 2020 market: silent and careful
Entering 2020, many experts in Vietnam Report’s survey say that the market situation will remain quiet, as the market has to adjust the prospect forecast for the real estate market, with the sole reason being the COVID-19 pandemic reducing both supply and demand due to the defensive mentality. However, generally, the Vietnamese real estate market still has the opportunity to be formed from factors including the recent Government’s movements regarding the legal policies creating new motivation for the market to develop healthier and more effective. Moreover, even though the COVID-19 pandemic is sudden and short-term, the Government has established timely supporting measures to help the real estate market recover better after the pandemic with a series of favorable policies including tax reduction, tax payment extension, rent costs, and credit support packages for those affected by the pandemic.
Besides, Vietnamese investors’ capability is growing and getting more flexible; the FDI capital flowing into the real estate industry continues to grow; expatriates are returning to Vietnam to avoid COVID-19; the infrastructure has been increasingly invested in by many localities, creating a driving force to attract real estate investors; and the EU-Vietnam Free Trade Agreement (EVFTA) was adopted in February and is expected to come into effect in July 2020. All these factors will strongly promote industrial and export fields in Vietnam through lifting 99% of commodity taxes, thus widening the list of tenants with the increasing demand from European manufacturers.
However, due to the new supply having no sudden development and not being redundant while demand remaining high, especially in the segments of land plots and apartment, together with the serious lack of compliance with the laws of investors, brokers have many potential risks, and this may negatively impact customer psychology.
Development trend and strategy
According to Vietnam Report, due to the impacts of COVID-19 and the limited real estate development in the 2019-2020 period, the real estate market has been diversified, while major firms with strong financial strength have managed to maintain the market and take advantage of the opportunity to develop, medium and small ones have faced multiple difficulties, resulting in the default of many enterprises due to the lack of work and human resource. This shows that COVID-19 has resulted in clear diversification, or in other words, this is how the market filters out those that are unsuitable to survive. In the context of the 2020 economy, investors have actively proposed strategies to overcome challenges and approach new opportunities, increasing the capability to adapt to the market.
According to the survey results of Vietnam Report, there are 5 top priority strategies of enterprises which are: ensuring good efficiency, quality, and progress of existing projects and constructions (100%); strengthening financial management and risk management, etc. (72.73%); improving the quality of human resources (63.64%), especially customer care issues to prepare for the aftermath of the pandemic; conducting cooperation, joint venture, association and merger deals (54.55%); and continuing to focus on developing brand and new products (54.55%).
Regarding the industry development trend, experts in the survey say that industrial park real estate will be the bright spot of the market in 2020 with many advantages in the context of the economy becoming stable, Vietnam joining many trade agreements, and the US-China trade war, in addition to the COVID-19 outbreak having strong impacts on the global economy, disrupting the global supply chain and shifting production from China to ASEAN countries, resulting in the increasing FDI inflow into real estate.
In addition, the industrial real estate sector also receives many support policies such as tax exemptions and tax incentives for investors. Vietnam has many advantages to become a new production center in Asia with a location close to China and its low labor costs. By the end of 2019, Vietnam had about 326 industrial parks and export processing zones established, with the filling rate reaching 70% - 80%.
In addition, the survey results of Vietnam Report also show that land plots are the most popular option with 62.77%; it is followed by apartments for rent (34.89%), condos (28.09%), retail: Shophouse, commercial center, etc. (10%), real estate industrial park (12.13%). However, there has been a shift in investment to neighboring markets, especially provinces with strong investment in industry, technology, infrastructure, and urban areas such as in Bac Ninh, Bac Giang and Vinh Phuc, Binh Duong, Bien Hoa, Dong Nai, Long Anh, or Da Nang, Nha Trang, Khanh Hoa, etc.
Particularly, the housing segment is assessed to still grow steadily, and M&A is expected to continue to be active in 2020. The reason is that the Circular 22/2019 / TT-NHNN officially taking effect from 2020 will continue to cause a capital shortage for businesses.
Besides, the resonance created by failing to sell products due to the pandemic has resulted in signs of finding investors to offer and transfer projects in the form of M&A or shares, or parts of the project, etc. of investors with weak financial capability. Looking at the data from the past also shows that, when the market fell into crisis, M&A activities took place very actively.
According to Vietnam Report, with the current data, many experts predict that in 2020 the M&A channel will continue to increase sharply, because the financial investment is an effective investment channel, and in case of difficult credit, this is an opportunity for people with money, foreign investors, domestic investors or overseas Vietnamese who are interested in Vietnam market with respect to financial investment. Real estate businesses are also willing to accept "sharing the pie" with people with financial capacity, including foreign ones. Moreover, cooperation projects with foreign countries also have advantages, such as in the Housing Law that allows 30% of the apartments to be sold by foreigners, this is the key to opening the market for foreign visitors, giving them easier access to the real estate market. Not only do M&A activities support capital but also help improve the capacity of domestic enterprises when they change themselves, follow the standards, and learn management experience of foreign partners.
In order to best support the sustainable growth of the real estate market, especially under the impact of the Covid-19 pandemic, experts and businesses in the Vietnam Report survey have identified six main groups of solutions. In particular, the top priority is that the Government needs to continue macroeconomic stability (77.14%), complete the legal corridor (65.71%), improve the infrastructure (62.86%), and continue to lower credit interest rates as well as expand credit lines for real estate loans (62.86%).
Businesses want to receive support from the Government and the State Bank with specific sponsor credit packages to stimulate demand in difficult periods such as allowing debt freezing, rescheduling, reducing loan interest rates, restructuring loans, and credit packages related to social housing and essential infrastructure, etc.
Besides, there are also 45.71% of businesses saying that the Government needs to strengthen market management, establish stricter management regarding enterprises and investors that are not serious about their operation, and build a unified real estate information and forecast system because at present the lack of information and concerns about the transparency of the market are affecting the ability to consume in general.
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