The Vietnamese property market got off to an auspicious start to 2019, despite fears of a real estate bubble bursting this year.(Photo: VietnamPlus)


Hanoi (VNA) –
The Vietnamese property market got off to an auspicious start to 2019, despite fears of a real estate bubble bursting this year.

The realty market ended a rocky 2018 with rising residential land prices, oversupply of condominiums and growth of credit for real estate beyond a safe threshold. Therefore, many experts forecast another housing bubble.

However, the market has moved conversely with several positive signs.

Calming worries about housing boom

A representative from the Ministry of Construction’s Housing and Real Estate Market Management Agency said that tightened controls were put on the property market in 2018 while policies, including the Government’s directive on apartment building operation, aided the market’s sustainability.

In the context of a stable macroeconomy, the construction sector and real estate market kept their momentum going. Particularly, property developers have favourable conditions to carry out projects across the nation after much red tape was cut.

While credit for real estate was tightened, businesses continued to seek alternative sources like launching initial public offerings (IPO), issuing shares and merger and acquisition (M&A) deals. The market also welcomed a strong flow of foreign direct investment (FDI).

Deputy Minister of Construction Le Quang Hung affirmed that no bubble elements formed in 2018 and FDI capital to the sector was increasing.

Several formidable challenges were thrown down to the market in the year, comprising prolonged administrative procedures for one project and slow approval process for investment plans.

As the State Bank of Vietnam (SBV) is tightening real estate loans, many investors struggle to complete their projects while customers can’t afford to buy houses. Besides, the National Assembly’s postponement of the adoption of the controversial draft Law on Special Administrative and Economic Units caused disorder in the realty market in Phu Quoc island, and Bac Van Phong and Van Don districts.

At one point, prices of residential land in Hanoi, Ho Chi Minh City and localities in their vicinities heated up, triggering worries about a housing bubble bursting. However, timely interference from the Government, the Ministry of Construction and ministries and sectors and local authorities stamped out the problem.

Also, the SBV’s tightened credit policy created opportunities to lure foreign capital from the US, Japan and the Republic of Korea, especially through M&A deals.

The Government targets GDP growth of 6.6-6.8 percent and CPI expansion of 4 percent in 2019, paving the way for the development construction and real estate sectors.

Forecast of macroeconomic index (Photo: VietnamPlus)


Investment wave moves to the north

The positive economic situation provides optimism among experts that there will be bright prospects in the property market. Several market management tools like tax and credit policies and land use planning continue to show their efficiency.

According to Nguyen Quoc Anh, Deputy Head of Batdongsan.com.vn, the Fourth Industrial Revolution has great impacts on Vietnamese real estate market. Green technologies and smart technologies will be applied and dominate realty products.

Furthermore, unlike previous years, property developers in the south will move their investment to northern localities with a rapid pace of urbanisation like Hanoi and Bac Ninh. Satellite provinces near the capital, which is home to various industrial zones, stand a good chance for development as foreign firms are looking to pull production out of China.

Housing interests in Hanoi (Photo: VietnamPlus)

 

Housing interests in HCM City
(Photo: VietnamPlus)


“Therefore, it is possible that the property market in the north will welcome a new investment wave in 2019. Those satellite markets will be vibrant,” Quoc Anh noted.

Similarly, HCM City’s neighbouring localities like Long An, Binh Duong and Dong Nai are expected to see advancement this year as there is not a large land fund in the southern hub.

Nguyen Manh Ha, Vice Chairman of the Vietnam National Real Estate Association, said there will be abundant housing supply in 2019. Smart cities with comprehensive infrastructure and full services like those developed by VinGroup will lead the market.

“Small projects will lose competitive edge as compared to large ones. Due to plentiful supply, there will be no substantial increase in housing prices this year. The prices will be stable, especially in the affordable segment,” Ha underlined.

He also said that industrial property will develop this year. Industrial zones should be built in a more comprehensive manner to lure foreign investors. Meanwhile, attention should be paid to commercial housing projects to meet demands of workers at the industrial zones.-VNA