CHALLENGES FACING REAL ESTATE MARKET IN 2019

Jan/28/2019 14:20

Foreign investment in this sector, big demand of people for residential house… are factors which will create light colour for the real estate market in 2019. However, many challeges still face the real estate market.

The real estate market in 2019 can witness an increase in the price of land ground in some areas.

First, the supply is decreasing: The total number of apartment units which have been supplied since 2010 until now is 600,000 units in which Ha Noi occupies 200,000 units. For the population of more than 80 million people, this ratio is low. Furthermoe, new policies to be enacted by the local Government in Ha Noi and in Ho Chi Minh City will have a restrictions to the development of housing projects within the cities or in areas where many residential zones have existed…., which will result in a shortage in the supply. In 2020, if this obstacle is not copped with, there will be severe lack of supply to the market.

Second, adjustment to supply and demand: The real estate marketin in the phase 2019-2020 will have significant adjustments for copping with the non-harmony between the supply and the demand, to facilite the market to return to a health direction for sustainable development. There will be a strong movement to the market segment of products suitable to most of low-income person living in urban areas. The market segment of luxury products will development in the direction to create distinct and unique products integrating with many facilities. Especially, the tendency to build intelligent residential zone and intelligent buildings with the safety concerning fire prevention and fire fighting will be considered as important.

Third, squeeze on real estate loans: Enterprises will be faced with the challenge from the State Bank performing the maproad to limit the lending of loans for the real estate market. But, this is also a good opportunity for them to conduct reorganization, restructure of the investment capital, to reduced the dependence upon credit loans with the aim to make their companies to develop better and better.

Under such circumstance, enterprises are required to increase their own equity to improved their own internal force and to consider opportunities of coorperation, joint venture, merge to form big real estate groups. Enterprises may consider the conversion of their companies into a shareholding company to meet the condition to mobilize capital from society with an orientation to become public companies to satisfy the requirements for them be listed on the securities exchanges.

Fourth, significant increase of foreign funds: As of the end of 2018, FDI poured into Vietnam was about US$ 22 billion, in which the real estate sector receives US$ 5.6 billion,standing the 2nd position because it occupies more than 20% of the amount of Foreign Direct Investment. Additionally, M&A activities have occurred in a lively manner with the participation of many foreign investors from the United States, Japan, Korea.

In 2019, it is expected that this sum will increase more because Vietnam is a country with political and economic stability. On the other hand, trade war strains between the Europe and the United States and an ideal destination.

Fifth, the legislation in Vietnam’s policies to attract foreign investment has relaxed, especially as for the real estate market. The permission of foreigners to buy houses in Vietnam will attract a large number of overseas Vietnameses who want to return to Vietnam to purchase houses and to make investment in real property.

Sixth, the real estate market in 2019 continue to develop in a stable manner , for there is no risk of “real estatte bubbles” ; but the market may see an increase of land price concerning foundation land in areas for which the State planning to become special zone, new urban ares with synchronous investment in infrastructure facilities and social infrastructures and hot real estate market in some housing projects in central urban areas where the progress of construction is quick, there are synchronous investments in facilities, investors have prestige and sale prices are reasonable.

According to CafeF