The pandemic that lasted for many months in Vietnam has changed the customers’ needs to settle down and relax. They now want to own a safe, private house, especially for high-income groups. When the pandemic occurred, customers no longer spent much money on luxury consumption activities. They turned to real estate investment, leading to an increase in demand in the market.
Besides, from the beginning of 2021 until now, bank interest rates have been continuously lowered to only 4%/year. Since commercial banks allow delayed debt repayment, including real estate debt, many investors are getting more optimistic about the economic recovery.
Therefore, at this time, only investors who need money will accept to sell real estate. Cash flow still tends to move into real estate when this is a safe money-keeping channel because bank savings no longer dominate, and the stock market is unpredictable.
With smart investors, this is a good impulse for cash flow to move, many real estate businesses have begun to accelerate year-end sales through attractive incentive packages.
Offices, hotels, and industrial parks are the three focal points in the real estate M&A market, but difficulties during Covid-19 have caused hundreds of millions of dollars in foreign capital to accumulate. Investors are waiting for their chances in Vietnam’s real estate market.
Most Korean investment funds are very interested in acquiring office real estate projects, hotels, resorts, and industrial real estate in Vietnam. Mr. Hong Sun, Vice President of the Korean Business Association in Vietnam (KorCham), said that Korean investment funds have great potential, with a cash flow of hundreds of millions of USD, waiting to pour into the real estate market. Vietnamese products.
"Korean investors often give priority to buying office buildings, hotels, and real estate projects that are available and in operation, then renovate and put them into operation," said Mr. Hong Sun.
KorCham's representative added that many office buildings in Vietnam are under negotiations for purchase by Korean investment funds and financial institutions, including an office project worth hundreds of millions of dollars.
Korean investors want to make indirect investments, to buy back office buildings or hotels to operate and lease, improve operational quality and business efficiency.
“This is a popular investment trend among Korean investors. They do not speculate but also do not want to own the property forever, so they choose to invest within 5-10 years, and after doing business effectively and improving the project, they will sell it to other financial investment funds or other investors in need,” said Mr. Hong Sun.
According to the Ministry of Construction, since the beginning of the year, there has been a sharp decline in supply and transactions in most real estate segments. However, the industrial real estate business has remained stable in terms of both rental prices and occupancy rates. The average occupancy rate in the main northern provinces and industrial cities (Hanoi, Bac Ninh, Hung Yen, Hai Duong, Hai Phong, etc.) reaches about 80%. If adding neighboring provinces (Thai Nguyen, Vinh Phuc, Quang Ninh, Ha Nam, Nam Dinh, Ninh Binh, Bac Giang), the occupancy rate is 69%.
The growth rate of industrial land rents slowed down in both the South and the North, but the average rent still recorded the highest increase of about 5%. Some projects with favorable locations in Bac Ninh, Hai Phong, Binh Duong, Dong Nai, or Long An have an increase of 5-10%.
In the context of international businesses looking for safe and cheaper new lands, many opportunities have been created for the whole market in general and industrial park real estate in particular.
Mr. Le Trong Hieu, Director of Industrial Real Estate Department at CBRE Vietnam assessed, industrial real estate and logistics real estate will continue to be bright spots. In terms of attracting foreign capital, because the demand from investment funds and industrial real estate investors is still high, while the industrial land fund from the primary market is limited, the secondary market and industrial real estate M&A will continue to grow in 2022. Supply from the secondary market will also increase.
Sharing the same view, Mr. David Jackson, CEO of Colliers Vietnam, said that industrial real estate will be an exciting segment of Vietnam’s real estate M&A market in 2021 and 2022, thanks to the trend of factory relocation out of China. That is an opportunity for investors to launch projects, anticipate and meet high-value production investments.
In conclusion, by the end of the social distancing in Vietnam, investors will focus their investment on industrial areas. Thus, the industrial real estate segment will continue to be the highlight in the real estate market for 1 to 2 years to come.
Source: The Ministry of Industry and Trade, baodautu
Compiled by VietnamCredit