The Vietnamese real estate market had a year of fluctuation throughout 2018, with many challenges for developers. Experts and developers alike have given their predictions for the market in the new year, with a number of positive outlooks and some outstanding segments for investors to focus on.
Nguyen Thi Thanh Huong General director, Dai Phuc Group
I foresee the real estate market in 2019 being more stable with an increasing number of products built by prestigious developers who have the capacity to implement such plans.
Such designs will have a very good legal status, which will bring profit to investors. As developers offer high-quality products to the market, investors will focus on product quality and long-term profitability.
While the land fund in the central business districts is limited, the trend to move outwards to the outskirts where infrastructure systems are improving remains strong.
The new supply of products will be limited because many projects have been halted by the authorities to meet the requirements of finalising legal documents, therefore projects which have attained legal status will be in high demand.
Pham Lam CEO, DKRA Vietnam
With positive consumption in 2018, landed houses continue to be a popular investment in the real estate market. However, due to the downward trend of the market, we can see that fresh supply cannot be increased and buyers will be more cautious with future investments.
In the condominium segment, there will be a new supply of between 30,000 and 35,000 units. In Ho Chi Minh City, the western and the southern areas are starting to dominate the supply of the whole market. Grades A and B will take the majority of the supply, with Grade C, affordable condominiums, still being limited whilst future projects remain in the pipeline.
The supply of landed houses and villas in 2019 could be between 2,500 to 3,500 units if current projects remain on schedule, whilst demand could slightly increase. The second home and holiday sector faces a number of challenges with a range of projects set to be put into operation. New supply into the segment will continue at familiar destinations such as Danang, Khanh Hoa, Phu Quoc, and Binh Thuan. High-end and premium projects in Ho Chi Minh City and vacation properties will be developed due to a sustainable increase in foreign visitors, largely from Asian countries.
Richard Leech Senior general manager of Commercial, Asset, and Property Service Management, Alpha King Real Estate Development
Fundamental issues regarding the economy will continue to grow in 2019, so I think the market will continue along the same path. The residential market is still facing a strong demand from a variety of different consumers. Some want to buy-to-lease in order to make good returns, others for capital gains because prices are quite low compared to other countries in the region, whilst others simply need somewhere to live.
Another trend these days is people living separately from their family: smaller nuclear families are emerging and they also need accommodation in smaller units. Young couples need to live close to public facilities such as school and shopping centres.
Another segment is landed houses and shop houses which people buy as an investment for future generations. Apart from condominiums and offices for lease, the hospitality sector is worthy of developers’ interest.
I see Vietnam as one of the best performing markets in the region and possibly one of the best in the world. There have been a lot of transactions among five-star hotels during the last year and all of hotel managing companies are seeking hotels in Vietnam because occupancy rates keep rising.
Apart from that, I think there is still room to grow in the retail sector, especially with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and other free trade agreements incoming. Retail could do with increased levels of investment.
Alpha King is focusing business on high-end luxury accommodation with artworks, amenities, prime location, and value-added services. We want to offer something extra special, something that is very different to others.
Troy Griffiths Deputy managing director, Savills Vietnam
It’s certainly going to be an interesting year. I think everybody was fortunate in 2018 which was very good for most industry players. I think there is some uncertainty, particularly with the land matter, the central government, the legal matter, and the land fund from state-owned enterprises.
All of these factors are slowing down the supply of land and accommodation to the market.
The market is now stable, but it could be fantastic in the future with more transparent governance and correct pricing. All of these would prove to be really good for the market.
Currently, there are some issues because land is not being delivered due to the review of the government and the auction process. What will happen is prices will begin to rise because buyers need clean, clear, and transferrable land that will increase in value.
Henry Chin Head of Research Asia-Pacific, CBRE
The Vietnamese market plays a significant role in the wider Asia-Pacific development strategy of CBRE. We are committed to the Vietnamese market and have assigned Hang Dang, a Vietnamese national, to the position of general director of CBRE Vietnam. The nation’s market has taken on even greater significance in the context of the trade war between the US and China.
Throughout the country, in the office sector, Hanoi and Ho Chi Minh City enjoy very positive growth. Ho Chi Minh City in particular is one of the most developed office markets and one of the outstanding products in this sector are co-working spaces.
Recent performance in the retail market has been underwhelming, but Ho Chi Minh City remains the number one market, and the nation will continue to outperform other major retail centres in the region.
Entertainment experiences which still lag behind in shopping centres, fashion retailers, and cinemas will be developed much more over the course of the coming year.
For logistics, it is a very interesting time for the market as we do not have much investment in the nation’s logistic market. Although we base our understanding on the background of the trade conflict between the US and China, the expectations of the sector are positive for the future with a continued trend of using modern logistics and industrial properties. Furthermore, famous retailers continue to enter the Vietnamese market.
With the real estate market in good shape and infrastructure improving, 2019 looks set to be very good for the economy.