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Housing projects will be proposed to sell land parcels, says ministry
Hanoi – Housing projects not located in any urban districts, except Hanoi and HCM City, are permitted to sell land lots.
housing projects will be proposed to sell land parcels says ministry
A land lot in Da Nang. Housing projects are proposed to sell land lots. – Photo

This is the regulation proposed at the end of May by the Ministry of Natural Resources and Environment in the latest version of the draft amending and supplementing Decree 43 on specific regulations for a number of articles in the Land Law, including conditions for transferring land use rights at housing projects.

According to the April version of the amended draft, the housing projects nationwide are not allowed to sell land lots.

Real estate experts said the ban of selling land lots would have strong impact on the domestic real estate market and it is very difficult to implement this ban.

Nguyen Tran Nam, chairman of the Vietnam Real Estate Association said the proposal on banning the sale of land lots is not suitable with both legal and practical issues, causing many difficulties for businesses and the people.

The ministry has the ban with good target of stopping illegal actions in trading land lots to cheat buyers over past time, Nam said. The fault is real estate market management of local authorities but not due to the regulations.

Nam said the market has high demand on trading land lots for investment while the State could collect tax from transferring land use right.

The problems on the land lot market at present included not close management for the market of the authorities and intransparent information about planning of housing projects in particular and the property market in general, he said.

Le Xuan Nghia said most of Vietnamese real estate enterprises are small and medium sized ones with limited financial capacity so they have often had land lot projects to recover capital quickly, ensuring cash flow to develop new larger projects.

Nghĩa said giving approval for selling land lots should depend on each housing project and each location because the general construction planning at present is not synchronised.

Trần Kim Chung, deputy director of the Central Institute for Economic Management, said the market still has demand on trading of land lots so the State should not ban this activity.

The permission of selling land lots is a policy decision and the issuance of this decision should be suitable with the practice.

Source: VNA

June 15, 2020 / by / in
Property firms return to market after COVID-19
After a brief hiatus, property companies have been resuming sales of developments and revealing their post-COVID-19 business plans since the beginning of May.
property firms return to market after covid 19
The property market would see increased competition in the post-pandemic period, experts said. (Photo:

Ministry of Construction data shows that some 80 percent of developers stopped sales or even temporarily halted operations during the first quarter while the rest had modest operations going.

Transactions slumped to 40 percent of the level seen in the same period of 2019. Only 14 percent of products entering the market during the quarter were sold, the lowest level in four years.

But the industry is now gearing to tap opportunities during the post-pandemic recovery, which is expected soon.

In early May, Vinhomes Company, a subsidiary of VinGroup, Vietnam’s largest private firm by market value, opened sales of S1.08 apartment tower at Vinhomes Ocean Park in Hanoi’s Gia Lam district.

For the first time a real estate sales event included livestreaming and online transactions.

In just over an hour nearly 250 apartments, or 50 percent of the total number of units on offer, were sold.

The Novaland Group began the sale of Aqua City in Dong Nai province’s Bien Hoa city. The 1,800ha project, mainly comprised of villas, is thought to be the largest property project in the province.

The Hung Thinh Corp plans to begin sale of its 96ha project in Binh Duong province’s Di An city in the third quarter.

It will have 3,000 housing, 12 officetel and 53 shophouse units.

According to experts, the real estate market is set to undergo a rejuvenation process as a result of the Covid-19 pandemic and awaits a new growth cycle.

It would be a difficult time for weak companies, but for those with deep pockets and professionalism, the pandemic would only pose short-term problems but could end up creating new opportunities, they said.

Tran Le Thanh Hien, chairman of the Danh Viet Group, said the difficulties of the real estate market are temporary and in the long term has significant potential for development.

It is time for property companies to expand their land ownership, especially those with strong finances.

Novaland Group now has 5,000ha of land with a portfolio of more than 40 real estate projects in HCM City and neighbouring provinces over the next few years.

Nguyen Van Hau, general director of Asian Holding, said property firms must improve their resilience and flexibility to cope with market shocks.

Although there are difficulties, the market shows positive signs, he said.

Experts said if the disease situation remains under control, the market would become active again in the last two quarters with the introduction of large new projects and diverse products that meet customers’ needs.

Source: VNA

June 13, 2020 / by / in
Transparency key for overseas investment
More transparent and compatible factors from the Vietnamese government and investors are key requirements to attract further funding from the international arena into the country’s real estate market.
1495p18 transparency key for overseas investment
Legal frameworks must be improved so the right investment appears, Photo: Le Toan

According to Nguyen Thi Thanh Huong, CEO of Dai Phuc Land, foreign investors are highly appreciated in the Vietnamese real estate market, especially if they have a long-term vision. However, the compatibility between groups inside and outside the country must be improved. This refers to the gaps between the legal framework, corporate government, and the types of products which developers are looking for.

Up until now, the Vietnamese legal system has been tangled in uncertainty across several issues, such as for condotels, tourism property, and for entertainment and leisure facilities. Moreover, foreign investors also pay the most interest to the capacity to manage the developers, as well as the type of projects which they plan to invest in.

“Vietnamese developers must seriously prepare a mindset and mentality and improve themselves towards international standards to be equal to foreign investors, so that we can successfully co-operate with them,” Huong said.

Dai Phuc Land is now developing a large-scale project called Van Phuc City. The developer has also recently successfully inked a contract with South Korean Daemyung Group to co-develop the $300-million Ocean World as part of Van Phuc City. “In order to fulfil this contract, we must upgrade ourselves to meet the demand of the foreign partner,” Huong said.

Meanwhile, according to Hong Sun, vice chairman at the Korea Chamber of Commerce and Industry in Vietnam, South Korean investors often have difficulties in accessing information on the Vietnamese partners with whom they plan to co-operate.

“Vietnamese partners must clarify their business status, along with advantages and disadvantages, so foreign investors can make the right decision,” Sun said.

Many deals have failed due to a lack of transparency. For example, domestic and foreign partners in a joint venture to develop a $140 million complex with horse track ended up in court due to a dispute that lasted over the last 12 years. The 500-hectare project is located in the southern province of Long An and invested by Ho Chi Minh City-based Hong Phat Real Estate JSC and China Policy Ltd. (CPL).

The Chinese company had made contributions of $15.6 million for its part. However, due to the extra expenses for compensation, the domestic partner requested CPL to contribute another $20 million, which was refused. Now in court, the joint venture is on the edge of bankruptcy.

Meanwhile, the unclear regulations on paying tax has also put a halt to a $4.1 billion tourism complex, Saigon Atlantis, through US Winvest Investment LLC, which has also dragged on for more than a decade.

In 2007, Winvest had advanced an amount of VND98 billion ($4.5 million) of the land rent to the southern province of Ba Ria-Vung Tau for land clearance and compensation of 87 hectares out of the total of 307ha. However, in 2012 this piece of land was handed over to the investor.

Following Decree No.69/2009/ND-CP, investors must pay land rental at the time of land allocation. With this regulation, the actual rent at the time of land allocation to the investor in 2012 had increased five times higher compared to 2007. Winvest, therefore, requested to pay the rates of 2007 but was refused by the local authorities. The authorities decided to revoke the project and add it to the list calling on other investors to develop in the coming time.

Although strongly impacted by the coronavirus, slowing down real estate development in Vietnam, interest from foreign investors remains high.

According to Eric Solberg, chairman and CEO of EXS Capital, a Hong Kong-based independent investment firm with interest in high-end residential projects in Vietnam, the pandemic has devastated the real estate market but it is not all negative for some sectors.

“Segments which still remain on the increase despite the pandemic are logistics, industrial property, and data centres,” Solberg told VIR.

He added that EXS Capital is working with local partners to locate sites with land and power to build the next generation of Vietnam’s digital economy. “With e-commerce, video meetings, and entertainment streaming all going through the roof, the cloud is ever more important and, as we say, data centres are where the cloud lives. So that looks very promising,” he said.

Solberg added, “For brave, smart investors, these situations are the very best time to invest, of course with a strong and honourable local partner.”

Meanwhile Don Lam, VinaCapital co-founder and CEO, said that some real estate development projects in Vietnam are being held up by challenging issues, but VinaCapital believes that the development of many other projects that are not encumbered by such intractable issues should be allowed to progress right away.

“Before the COVID-19 outbreak, the pent-up demand of middle-class homebuyers, coupled with the dearth of new projects, led to a situation in which newly-launched units were typically receiving multiple bids on each unit for sale. In our opinion, that is a clear signal that more units need to be developed and launched for sale,” Lam said.

VinaCapital expects more manufacturers to expand or locate operations to Vietnam, an acceleration of a trend that has already brought significant levels of investment. “Vietnam continues to offer tremendous opportunities for investors who know how to identify and access them and avoid pitfalls,” Lam said.

By Ngoc Anh

June 12, 2020 / by / in
East Ho Chi Minh City entices new investors
The recent green light for Ho Chi Minh City People’s Committee to set up an innovative hub in the east would make the so-called Vietnam Silicon Valley come to life and attract further investment into the city’s real estate market.
1495p19 east ho chi minh city entices new investors
The government wants Vietnam, in particular Ho Chi Minh City, to transform towards innovative hub status, Photo: Le Toan

The proposed innovative city is expected to combine research and development centres, human resources training, and application of science and technology.

The creation of this creative city is based on the idea of building a hi-tech and smart urban development zone for Ho Chi Minh City, the southern key economic region of the whole country, and for neighbouring regions.

The initiative, according to Ho Chi Minh City Party Secretary Nguyen Thien Nhan, will aid momentum to boost the economy of the whole region for the next decade, and is expected to contribute 30 per cent of Ho Chi Minh City’s GDP, while becoming the nucleus of Industry 4.0 in Vietnam and deploying a smart urban hub.

According to designs proposed by Sasaki-enCity, this innovative hub will cover districts 2, 9, and Thu Duc.

Thu Duc district already has a high concentration of institutes, research centres, and four large universities with more than 10,000 lecturers, including more than 1,000 professors and doctors and 100,000 students.

District 2 is home to Thu Thiem New Urban Development Area – the second economic hub of Ho Chi Minh City and soon to become the new international financial centre of the city and the wider region.

Singaporean developer Keppel Land is also developing the Saigon Sports City venture in this district, which is applying innovative urban solutions including smart security and mobility, and environmental infrastructure solutions.

Meanwhile District 9 boasts Saigon Hi-tech Park, the second-largest such park in the country, covering more than 700 hectares and a base for 35,000 labourers. The park, with a total of $6 billion investment capital, is also home for Intel Products Vietnam – a leading overseas high-tech investor in the country.

Recently the east has become a new heart for Ho Chi Minh City with many large-scale infrastructure projects, from existing schemes such as Hanoi Expressway, Ho Chi Minh City-Long Thanh-Dau Giay, Metroline 1, the second ring road, and Mai Chi Tho Boulevard either under construction or in the pipeline.

Ho Chi Minh City People’s Committee said that approximately 70 per cent of the investment capital of the whole city for the last 10 years was allocated to the east, with 216 projects and the total investment capital of VND350 trillion ($12 billion).

In addition to that has been creation of a transport system to connect the area with neighbouring provinces, including ring roads 2 and 3 and various bridges to offer deeper connections.

In the neighbouring province of Dong Nai, the existing Ho Chi Minh City-Long Thanh-Dau Giay Expressway has also seen proposals to expand it into double lanes. This type of expressway would not only break through the traffic flow to the incoming Long Thanh International Airport but also reduce congestion from the west to city’s heart.

According to Nguyen Dinh Trung, chairman of Hung Thinh Corporation, the east of Ho Chi Minh City has become a golden location attracting real estate developers to meet the increasing demand of local residents. “This opportunity is open for all, from domestic and international investors to other local people,” Trung said.

Real estate prices in the east of Ho Chi Minh City have been increasing in recent years, especially in districts 2 and 9 where a doubling in price has been seen in the last two years alone.

Many other projects in this area are attracting interest from both investors and buyers, such as the Senturia Central Point project located next to Saigon Hi-tech Park in District 9, and the Vinhomes Grand Park where prices are continuing to rise.

In addition, land costs in the east’s neighbouring areas such as Nhon Trach and Bien Hoa city also increased by up to double compared to quotes from two years ago, up to approximately VND100 million ($4,300) per square metre in central areas.

By Bich Ngoc

June 11, 2020 / by / in
Apartments for sale in Ho Chi Minh City drop to five-year low
Impacted by limited new supply, the number of apartments for sale in Ho Chi Minh City was down 42 per cent in the first quarter of this year compared to the same period of last year, hitting the lowest level in the past five years.
apartments for sale in ho chi minh city drop to five year low
The low point in apartment prices in Ho Chi Minh City offers good opportunities for cash-rich buyers and investors (Photo: Le Toan)

According to Savills Vietnam, only three new projects opened bookings before Tet and were officially launched before the COVID-19 lockdown. These are D’lusso and Citigrand in District 2 and the West Gate in Binh Chanh districts, all of which have achieved an average 79 per cent take up rate right before the lockdown.

Nguyen Khanh Duy, director of residential sales at Savills’ Ho Chi Minh City office, said that with a solid equity background, there appears to be little defaulting or delays to payment schedules for apartments in the coming time, despite of the COVID-19.

The number of units sold in the entire Ho Chi Minh City market dropped by 32 per cent on-year to just slightly more than 4,700 units.

With the majority of 2020 sales taking place prior to the pandemic in January and February, absorption was positive at over 50 per cent.

However, social distancing and tourism restrictions decelerated rental demand in Ho Chi Minh City.

By the end of the first quarter of 2020, all grades of affordable, mid-, and high-end apartments have suffered from drops in rental yield with a drop of 4 per cent for Grade A and 5.2 per cent for Grade B. Those rates were around 6-8 per cent in 2019 and before.

In the coming quarters, with national borders closed, timelines being uncertain, and buyers being more cautious, rental demand and investor purchasers will be affected. Yields will continue to be pressured in the near term.

From 2021, however, indicators suggest improvements in Grades A and B, with low buy-to-let stock levels and rental demand expected to recover with COVID-19 under greater control.

Over the short-term, the secondary market may come under pressure from outstanding debts. A Savills study of 40 Grade A and B projects showed levels of outstanding purchase contract payments will increase and peak in the first quarter of 2021.

The impact on personal incomes has resulted in increasing numbers of short term investors who are unable to meet their instalments, in turn pressuring secondary prices. However, in reviews of specific high-end developments, virtually all payment schedules have been maintained, with no defaults or extensions required so far. For cash-rich investors however, lower prices and illiquidity present long-term opportunities.

Social distancing is affecting developer sales strategies, but the biggest effect is on buyer behaviour.

Having healthcare, essential services, and education nearby and minimising travel has become increasingly relevant, and high-end buyers will favour smaller, less densely built, and more private developments with good amenities.

Most major developers have postponed launches or ramped up online sales efforts. Anticipated stock until 2022 is over 147,800 units, 60 per cent of which will be made by a dominant Grade C segment.

The government-led stimulus, including an emergency interest rate cut, and willingness of mortgage lenders will help mitigate the effects of COVID-19.

Developers may increasingly use their balance sheets to provide extended terms or debt to maintain competitive marketing. Decreasing household sizes and steady 2 per cent per year population growth in Ho Chi Minh City will also help boost longer-term recovery.

By Bich Ngoc

June 8, 2020 / by / in
Vietnam industrial property supply rises as companies exit China
Vietnam industrial property supply rises as companies exit China

Factories seen in an industrial park in the southern province of Long An. Photo courtesy of Long Hau Industrial Park.

Supply of ready-built factories and warehouses in southern Vietnam will increase by 28 percent this year to 2.7 million square meters.

As more companies arrive from China after the pandemic, supply will rise by 25 percent to two million square meters in the north, real estate consultancy CBRE said in a recent report.

It added that the trend of companies seeking to reduce supply chain dependency on China is likely to benefit Vietnam.

“Surging demand from foreign manufacturers seeking to relocate to Vietnam – and a desire to commence operations as soon as possible – are driving demand for ready-built industrial properties,” said Thanh Pham, associate director of research and consulting services, CBRE Vietnam.

Hieu Le, director of the firm’s industrial leasing services, said demand for warehousing has been mainly driven by e-commerce companies who are expanding storage space and distribution networks.

After the pandemic is contained, the average asking rent for warehouses would increase by 4-11 percent, he noted.

“There is growing consumption and distribution of groceries and fresh foods, which are set to accelerate occupier demand for temperature-controlled storage.”

Analysts have said Vietnam’s industrial real estate could benefit from foreign investors moving production out of China.

Apple, Google and Microsoft are reportedly making plans to begin production in Vietnam this year. Customers have found some Apple wireless earbuds AirPods Pro carrying the ‘Assembled in Vietnam’ label rather than the traditional ‘Assembled in China’ tag.

Vietnam’s average industrial land price is 43 percent lower than that of Thailand and 54 percent lower than that of Malaysia, and its corporate income tax rate of 20 percent is among the lowest in Southeast Asia, according to a report by securities brokerage VNDIRECT.

The country’s many trade deals, especially the EU-Vietnam Free Trade Agreement, which is set to come into effect this year, would be another factor in attracting foreign investors, it added.

Vietnam has 260 industrial parks with an occupancy rate of 76 percent, according to the Ministry of Planning and Investment. Another 75 are under construction.

By Dat Nguyen

June 7, 2020 / by / in
Developers can ride funding waves
Competitive prices, along with advantages in climate and natural resources, are helping Vietnamese second home and holiday properties become one of the hottest investment channels in the country.
developers can ride funding waves
A raft of major developers are resuming wide-ranging activities as the country gets back up to speed. Photo: Le Toan

The Vietnamese tourism industry is attempting to push ahead with operations as demand from domestic tourists begins to increase exponentially.

The Ministry of Culture, Sports and Tourism has issued a “Stay At Home with Vietnam” programme to promote domestic tourism with many promotions and incentive packages by both the hospitality and airlines sectors.

It has been just over a month since business restrictions were lifted in the country, and since then there have been a raft of promotion packages available, combining accommodation, food and beverages, and airline tickets within Vietnam at discounts of around 30 to 50 per cent. These could remain in place for another month at least.

After positive signs, the tourism industry is now actively preparing for the second phase of returning to normal when it begins to welcome international visitors from safe markets.

Second home kickstart

As tourists return and demand increases, second home and holiday developers can resume their sales activities as well.

Moreover, the industry has been galvanised with the introduction of many incentives and policies issued to encourage developers to invest in the market, including stimulus financial packages and the recent decision to expand deadlines for tax submissions.

Back in February, the Ministry of Natural Resource and the Environment issued a guideline to grant ownership for tourism properties including condotels and second home villas and officetels valid for 50 years and eligible to extend to 70 years. These guidelines had already started to encourage developers, investors, and buyers that their tourism property would be granted ownership like other accommodations.

Many developers have resumed their sales campaign. Among those CEO, Vingroup, Sun Group, and Novaland are leading the market with a range of projects to woo buyers. Real estate developers are now recruiting hundreds of salesmen to cover such ventures.

According to experts, in order to increase the liquidity of the market, the government should consider permitting foreign buyers to buy second homes and holiday property in Vietnam.

They say that Vietnam has all the conditions to become a “golden destination” for second homes for foreign buyers, however, it remains behind many other destinations in the region such as Phuket in Thailand or Bali in Indonesia.

Figures from the Ministry of Construction revealed that Vietnam has around 66,000 units of tourism accommodation, compared to 120,000 in Phuket alone.

According to Doan Van Binh, chairman of CEO Group, investment from foreign buyers would make the liquidity of the market increase and attract further international tourists to the country.

“The participation of experienced foreign investors into tourism real estate will set new requirements, diversifying and improving product quality in the market,” Binh said. “Experience from other countries and the open policy of foreign real estate ownership is a key factor to attract such investment into real estate, and into tourism real estate in particular.

Vietnam should, Binh said, mimic a programme from the Malaysian government, to set up a so-called “Vietnam My Second Home” policy to attract foreign buyers into the market, which can offer residence visas alongside the valid time of ownership.

“Allowing foreigners to buy tourism real estate will attract a large capital source into this segment but can still be managed by the current regulations on conditions and procedures for foreigners to buy homes in Vietnam,” Binh added. “We hope that the open mechanisms and policies on foreigners owning real estate will soon be applied as an urgent solution to help the market recover quickly after the pandemic. At the same time, this is also a long-term solution for Vietnam to become a holiday destination and entice retirement and real estate investment, increasing competitive advantages with other countries in the region.”

Real estate expert Dang Hung Vo suggested that permitting foreigners to buy second homes in Vietnam is a good way to develop the whole tourism sector of the country.

“Vietnam is a wealthy potential country on tourism but has not been professional at all in developing the sector. We must change our mindset on tourism development and find out a better approach to help the market thrive. I think the opening for foreigners to buy a second home in Vietnam would be able to create remarkable change for the whole sector,” Vo said.

Lessons from regional countries

Many countries around the world have allowed non-nationals to invest and own properties. The openness of real estate ownership policies, which has created favourable conditions for investors in the market, has helped the second home segment in many countries develop strongly.

In Singapore, foreigners are allowed to buy almost all residential real estate products except social houses and some other specific limited products. In particular, Singapore allows them to buy villas attached to land at Sentosa Cove with a short-term ownership.

Malaysia’s aforementioned second home initiative allows foreigners with their families (spouses and children under 21 years of age) to live there with visas of 10 years or more when they meet set financial ability conditions.

The policy has thus far has created great attraction, with more than 42,000 non-nationals purchasing homes in Malaysia between 2002 and 2018.

Countries and territories which have more open policies for foreigners such as Japan, Singapore, Malaysia, and Hong Kong (China) currently boast the strongest and most sustainable real estate markets.

Meanwhile, in Thailand, there has been a new wave over the past five years of people owning a second home for “elderly relaxing” after the government issued a so-called retirement visa for foreigners over 50 years of age.

Those who fit the bill, along with meeting other certain conditions, are permitted to buy second homes in famous tourism destinations such as Phuket, Hua Hin, and Pattaya.

These regional schemes could give Vietnam further food for thought as the government ponders its next moves in the restructuring of the economy post-pandemic.

By Bich Ngoc

June 6, 2020 / by / in
Vietnam Report names most reputable developers
Vietnam Report has ranked the top property developers in the market in terms of reputation, based on financial capacity released in the latest financial reports.
1494p18 vietnam report names most reputable developers

Other criteria in naming the groups involved media products from each company, and survey results from experts in the real estate market, as well as residents who are actually living in the projects of the candidates.

The real estate market in Vietnam experienced both highs and lows in 2019. The overall situation was still at low supply and high demand, especially in major cities like Hanoi and Ho Chi Minh City.

The absorption rate of property products last year was at 70 per cent compared to the 60 per cent of 2018, with some major locations achieving 80 per cent.

The supply to the market was reported at more than 107,000 units, only more than 60 per cent compared to this in 2018.

Of those, more than 72,800 units were sold last year, occupying 64.7 per cent compared to the previous 12 months.

According to Vietnam Report, the tightened procedures on project approvals and implementation, as well as tightened credit sources for the real estate sector, were the main reasons for the low supply.

Also last year, nearly 600 businesses were closed down within the sector. Many small-sized and startup enterprises were disbanded due to lack of investment capital and facing difficulties in capital approach.

Vietnam Report also stated that nearly 53 per cent of real estate businesses assessed that the investment environment in 2019 was slightly worse than in 2018.

By Quynh Chau

June 2, 2020 / by / in
Proposal to limit higher-end residences brings controversy
The recent proposal from the Ministry of Construction to limit new investment in high-end residential property, including villas and high-rise apartments, due to already high inventories has been a cause for concern among industry experts and developers.
1943p19 proposal to limit higher end residences brings controversy
High-end property has been developing rapidly, and developers also want to increase supply in low- to mid-end segments, Photo: Le Toan

According to the Ministry of Construction (MoC), the proposal to limit high-end residences is based on the difficulties the real estate market is facing, both from the low liquidity resulting from COVID-19 and the oversupply of high- and mid-end properties, coupled with the shortage in the affordable segment.

The demand for housing in the mid- and high-end segment with prices above VND25 million ($1,000) per square metre only accounts for 20-30 per cent of the total, while the affordable segment accounts for 70-80 per cent of market demand.

There are more than 4,400 new residential and urban development projects nationwide with the total investment capital of VND4.8 quadrillion ($208.7 billion). Of this, the value of properties in inventory is VND104 trillion ($4.5 billion) by the end of March.

Aidan Wee, co-founder and executive director of PropNex Realty Vietnam, believed the proposal is a step in the right direction and will help redirect financial resources in the real estate sector and put the development capabilities of developers to better use. “This would encourage the supply of affordable housing to cater to the real demand of the urban population which is key to the sustainable development of the real estate market,” Wee told VIR.

Andy Han Suk Jung, CEO of SonKim Land also said that it is good that the government is making an effort to increase the supply in the low- to mid-end segments as the supply has been far below demand in the vast majority of the market.

He believed the price must be set by supply and demand, especially in the mid- and high-end markets, in the affordable segment the government has an important role to play by incentivising developers and by facilitating the approval process so that development cycle can be shortened.

“There are many pieces of land that are under government control. If those can be allocated for affordable and mid-end apartments, the supply can be increased in rather short order,” Jung said.

However, according to Wee, while it is a step in the right direction, the proposal will not be effective by itself.

“A more comprehensive legal framework must be developed by the MoC to support mass housing. The ministry could also introduce policies to curb speculation in the affordable housing segment and issue new incentives for developers to encourage them to roll out more projects in the segment,” he said.

Well-meaning as it may be, limiting the premium and luxury housing segments to force developers to focus on the affordable and mid-end segments might not be entirely reasonable because there is still demand for high-end housing with better amenities and living environment.

“Purposely limiting supply to these segments will cause a supply and demand imbalance to greatly widen prices across different segments and put premium and luxury products out of reach for the more affluent people,” Wee added.

Jung from SonKim Land also explained that limiting mid- to high-end products would not help the market as Vietnam’s middle-income population is growing rapidly who can afford better projects, while there is also steady demand by foreign buyers who are here to work or to invest in real estate.

At a while many people may be concerned that a restriction will only drive prices in the affected segments higher as demand will keep going up while supply is frozen. “I think it would be advisable to adopt a hands-off approach and let supply and demand set the prices, and help to intervene in the affordable segment to give incentives to developers and shorten lengthy procedures to encourage developers to do more and more,” said Han.

Stephen Wyatt, country head for JLL Vietnam, said that over the past few years the residential sector has been developing and there has been a considerable amount of new mid- and high-end apartments entering the market in both major cities of Hanoi and Ho Chi Minh City. Key factors to consider, according to Wyatt, are that the total supply of residential apartments is coming off a very low base, especially when compared to other Southeast Asian cities and the ratio of apartments to the population is still low.

At the same time, it has become incredibly difficult to find land within close proximity to the city centre. This has pushed land values to artificially high levels, which in turn has increased the prices of residential apartments. Moreover, the market needs to shift focus to more affordable housing, catering for the end user. However, this can only be achieved when there is more available land and land values are cheaper.

Wyatt added that the market needs to re-calibrate and focus on real demand and a balance of all sectors.

Meanwhile Damian Sung, sales director of Asia Bankers Club, told VIR that with the optimistic results of the fight against the pandemic in Vietnam, the real estate market should be largely unchanged. However, investors seeking distressed assets prove that this is not the case.

For those that have invested earlier, they will likely see the value of their properties go up as high-end supply is limited, with heightened interest in current inventories or new projects being launched this year. This will also boost the secondary market for foreign quotas as there are limited supplies of good development in both Ho Chi Minh City and Hanoi. “However, the bad part is that there will not be newer projects for the time being,” said Sung.

Instead of limiting the high-end segment, experts suggested the Vietnamese government to issue more incentives to encourage developers to invest in mid-end and affordable housing.

By Bich Ngoc

June 1, 2020 / by / in
Investors need to consider carefully before buying old apartments: experts
Experts have recommended investors consider carefully before buying old apartments to ensure investment efficiency.
investors need to consider carefully before buying old apartments experts
Hanoi has more than 1,500 old apartment buildings. – Photo

One of the main issues is that the time it takes to rebuild an apartment building is variable, and consequently has a large impact on payback.

After more than 10 years of implementing a plan to rebuild old apartment buildings in Hanoi, only 20 have been renovated, accounting for just 1 per cent of the total in the capital. The city needed a lot of time to fulfill the plan, according to Hanoi’s Department of Construction.

Experts said there were also problems with reaching compensation agreements with residents of old apartment buildings, causing delays.

Dao Ngoc Nghiem, vice chairman of the Viet Nam Urban Planning and Development Association and former director of Hanoi’s Department of Planning and Architecture, said it was difficult to ensure the interests of all parties including residents and enterprises.

In addition, there were still many problems related to the implementation of those projects, according to Nguyen Van Dinh, deputy chairman of the Viet Nam Association of Real Estate Brokers.

Hanoi’ Department of Construction reported the city had more than 1,500 old apartment buildings, most of which were 40-50 years old located in central business districts such as Kim Lien, Trung Tu, Phuong Mai, Thanh Cong and Giang Vo.

The buildings had infrastructure and services in place, but had degraded over the years.

In response, the State has issued a policy to rebuild those buildings to improve living conditions for residents.

According to the Viet Nam Association of Real Estate Brokers, a number of investors are buying old apartments and waiting for opportunities to rebuild them to sell or lease for higher prices.

This has led to old apartment buildings becoming a hot segment in the domestic property market.

A 50-sq.m apartment on Hang Voi Street is on offer for VND70 million per sq.m, while a 40-sq.m old apartment in Giang Vo is going for 57.5 million per sq.m.

Prices fluctuate between VND40 million and VND60 million per sq.m for old apartment buildings in Dong Da District, such as Trung Tu and Phuong Mai.

This meant the price is the same as a new mid-end apartment in inner-city areas such as Tay Ho, Hoang Mai and Ha Dong, or luxury apartments on the outskirts of Hanoi, the association said.

A property broker said the higher prices of old apartments was due to their locations near schools, hospitals, markets and shopping centres.

The price of an old apartment on Hang Bong Street in the Old Quarter even stands at VND120 million per sq.m, more expensive than luxury apartments in other areas.

Source: VNA

May 30, 2020 / by / in