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Last updated: Friday, May 26, 2017

 

Property Market: Cautious Investors

Posted: Friday, February 24, 2017


In the first two months of 2017, the Vietnamese real estate market has not experienced major changes. It even witnessed a slight decline in deals from late 2016. The market development has fuelled investors with anxiety because many specialists have warned against potential hardships in 2017.

According to the Department of Housing and Property Market under the Ministry of Construction, about 1,300 deals were reached in Hanoi in January 2017, down 7.1 per cent from December 2016. Ho Chi Minh City saw a drop of 3.4 per cent to 1,400 deals in the same period.

Most deals in Hanoi and Ho Chi Minh City belonged to midmarket and upmarket segments. Townhouses and villas did not find many buyers. Social housing and commercial housing segments were also dull due to undersupply

According to industry experts, transactions declined on rising buyer laziness after the Lunar New Year.

However, market signals in early 2017 raised concerns to investors because the market outlook was predicted to be pessimistic by many specialists. Dr Tran Kim Chung, Vice Chairman of the Central Institute for Economic Management (CIEM), said that the market would enter the weakening cycle in 2017. When credit supply is squeezed, speculative activities will decline. Foreign cash flows into the real estate sector are under expectations.

Mr Nguyen Mac Hoai Nam, General Director of Nam Phat Investment Consulting Company, said that, after three years of growth from 2013 to 2016, the market will turn more volatile in 2017 when opportunities are still in horizon but investors will still be cautious and apprehensive. He cited his experience as saying that after three years of growth, the market will undergo two years of slowdown. Thus, investors will tend to be more prudent in 2017 - 2018. Specifically, he estimated that land prices will not rise more than 20 per cent but in the range of 7 - 10 per cent (half a growth in 2016). Residential land prices climbed from 2014, surged in 2015 and peaked in 2016. The market is unlikely to have a strong growth in four straight years.

CIEM specialists pointed out three scenarios of the property market in 2017: Strong growth, little change and slowdown.

They lacked confidence in strong growth scenario. “The scenario much expected by many is unlikely to happen” because strong growth only comes on the condition that the world does not fall into financial crisis, international relations are smooth, Vietnam’s economy has stable growth and sees no unforeseen difficulties.

However, some are still optimistic about the market prospect in 2017. Mr Marc Townsend, Managing Director of CBRE in Vietnam, said, although there will be no great strides, abundant resources will positively support growth momentums in 2017.

Luong Tuan

 








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