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Dinh Vu

Economic Sector

Last updated: Friday, April 20, 2018


Economic Stability, Infrastructure Improvement: Foundation for Real Estate Development

Posted: Wednesday, March 22, 2017

According to statistics of the Vietnam Report, the revenue and average after-tax profit in 2015 of real estate developers reached VND649,571 million and VND76,462 million, respectively, higher than that of those in materials, construction and real estate consulting. This proves that the investors have operated effectively in the past time.
The Vietnam Report and VietNamNet have announced the list of top 10 most reputable property developers, top 5 consulting firms and real estate brokers, top 10 building contractors and top 10 material providers in 2017. Those on the list have stable financial capacity, good experience in the industry, widely recognised brands and active contribution to the overall development of the real estate, construction and construction materials in Vietnam in recent times.
VinGroup topped the list of the best property developers in 2017, followed by Novaland Group, Sacombank Real Estate; C.E.O Group, Hoa Binh Group, Him Lam Corporation, Sun Group, Dat Xanh Group, Phu Long Real Estate JSC and Ha Do Group.
Vietnam Report also conducted a survey of companies in real estate trading, construction and building materials industries in 2016-2017. According to the results, the businesses are optimistic about the investment and business environment in the near future.
According to the Housing and Real Estate Market Management Agency (MOC), as of the end of February, the total value of real estate inventory approximated VND29,573 billion, down VND1,450 billion, compared with that of December of 2016, or 4.67 per cent reduction.
According to the database recently published by the General Statistics Office (GSO), the first two months of 2017 witnessed the highest rise in the number of newly established real estate businesses with 43.4 per cent in the number of businesses and 63.8 per cent in registered capital, while the number of suspended businesses or those filing for dissolution in this sector decreased by 22.1 per cent, compared to same period last year. This is seen as the most influential factor to growth objectives of real estate business; 54.5 per cent of companies surveyed responded that the factor of the "competitors in the industry" most affected their business growth in 2017.
2016 was considered a breakthrough in construction businesses. As of the end of February, 111 out of 119 businesses in the construction sector published their quarterly financial reports, of which 104 businesses posted profits (accounting for 87.4 per cent) and 7 reported losses (5.9 per cent). Besides, the Business Monitor International (BMI) forecast that the real growth of the construction industry is about 6 per cent on average per year in the period of 2016-2024, 4.4 times that of the same period of 2013-2015.
According to a recent survey of businesses in construction and building materials industries, the majority (71.4 per cent) of businesses believe that demands for housing construction and civil engineering in 2017 tend to rise, but 28.6 per cent say that demands will remain unchanged, compared to that of the previous year. Clearly, the industry's growth potential is huge today. If capable of taking opportunity, businesses in construction and building materials will soon reach the planned revenue and profit in 2017.
The report has recommended that a stable macro-economy and an improvement of infrastructure will create better conditions for businesses in real estate, construction and building materials.
In the opinion of surveyed enterprises, to better support businesses, the government should give priority to the goal of "macroeconomic stability" (68.7 per cent votes) and "improving infrastructure" (61.5 per cent votes). In fact, many projects are nice and have good quality at reasonable price, but they are located quite far from the centre so they are less attractive to customers. If infrastructure and transportation are improved, these projects will be the "magnet" in the context of rising housing demand.
Some businesses commented that constant, regular and accurate provision of market information will give them to a better overview of market trends to build strategic and appropriate customer segments.
Markets of real estate, construction, and building materials have many chances to "boom" in 2017. However, it should be noted that real estate investment is at a high risk of a "real estate bubble". Therefore, businesses should be cautious about appropriate decisions, in accordance with the trend of the market, thereby building the brand reputation and becoming a trusted partner with customers whenever they think of buying and building their houses.
Anh Mai

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