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Investment in Vietnam’s realty market is absolutely popular

In the recent years, the realty market has become more active and dynamic in Vietnam, especially the segments of Hanoi and Ho Chi Minh City. Therefore, instead of putting money in banks, gold or dollars, investment in property is more attractive to the investors.

Minh Hanh of Ho Chi Minh City’s Tan Phu District, for instance, said: “I never put my money into saving accounts because I used to invest in gold and dollars. But now I invest my money in real estate and stocks because gold prices have decreased sharply and the gap between domestic and international prices is too big.” Since 2010, gold has plateaued. The Government has tightened gold management and banks are not allowed to mobilize or borrow gold any more.

This year, the real estate market has gathered pace and been a magnet for investors. Duc Vinh of Ho Chi Minh City’s Go Vap District said last October he had bought a piece of land for VND2.6 billion ($115,000) and planned to build a house. But half a year later, a buyer offered VND3.5 billion ($155,000) for it and he sold it immediately.

However, Vinh’s profit is not considered huge in the current market situation. Hoang An, a broker in District 12, said now everybody wants to buy land because of high profits and liquidity. Things have turned on their head from a few years ago when prices were low yet it was difficult to sell land. “Bank savings interest rates are very low, gold and dollars do not yield high returns and investors are looking for better investment opportunities,” he said.

“Inflation has been controlled well in recent years and buying gold as a hedge has reduced.” Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City branch, said the loans given to the property sector in the city are worth VND238 trillion ($10.6 billion) or 10.8 per cent of the total.

The Ho Chi Minh City Real Estate Association reported that in the fist six months of this year lending to the sector increased by 6.35 per cent, 1.35 percentage points higher than in the same period last year. Real estate firms accounted for a full third of the 18,000 companies established in the city in the first six months of this year.