Markets & Prices

Last updated: Wednesday, May 15, 2019


Property Inventories Fall over 80 Pct in Five Years

Posted: Thursday, September 06, 2018

According to the latest report on socio-economic performances in 2018 and development plans in 2019 by the Ministry of Planning and Investment, the real estate market has been well controlled to maintain a reasonable growth. Remarkably, real estate inventory dropped sharply. After five years, stockpiles sank more than 80 per cent. Specifically, total property inventories valued about VND24,072 billion as of the end of June 2018, down 81.27 per cent from its high seen in the first quarter of 2013 and down 5.16 per cent compared to December 2017.

The report said there are no signs of any abnormal or extreme activity in the real estate market where prices are still stable and liquidity remains relatively high in both deals and value. Meanwhile, the structure of real estate goods is increasingly diverse in product categories and segments to meet more needs of the people and society. The market is looking for people with real demand and real payment capacity.

The report also stressed that prices have been controlled after soaring aggressively in places proposed for forming special economic zones like Van Don (Quang Ninh), Phu Quoc (Kien Giang), Bac Van Phong (Khanh Hoa) and areas with important blueprint projects like Long Thanh (Dong Nai) and suburbs of Ho Chi Minh City.

Foreign inflows keep rising
Industry experts said, the property market will be stable through 2018 and there will be no major disruptions affecting market trends. However, contrary to the hesitance of local investors, foreigners still see the real estate market in Vietnam rich in business potential and opportunities. According to a report by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, foreign investors registered to invest a total of US$24.35 billion in the first eight months of this year, up 4.2 per cent year on year. Of the sum, fresh projects brought in US$13.48 billion; existing projects added US$5.58 billion; and the rest or 5.28 per cent of the registered value, was spent on equity investment.

Of the five largest projects in the reporting period, three projects are involved in real estate, including US$4.1 billion Smart City (Hanoi) invested by a venture consortium of Sumitomo (Japan) and BRG (Vietnam), US$1.2 billion Laguna (Thua Thien Hue province), and US$600 million Lotte Mall (Hanoi). These three projects helped raise the total investment value registered for the real estate sector to US$5.9 billion in the first eight months, accounting for 24.2 per cent of the total FDI fund registered and bring the total FDI value in this sector to US$56.8 billion to date, ranked second among the most attractive sectors to foreign investors in Vietnam.

Still hard to control market information
Although the Government introduced a lot of measures to clarify the real estate market and bring property to the so-called right value to navigate the risk of market bubble, the boom of internet and social networks has made information control more and more difficult. Therefore, up to now, information about the property market is still considered a puzzle for people interested in this market.

Apart from information published by personal pages and boastful advertisements, online marketing programmes in forums and classified websites are distorting the market. According to statistics, about 300 property ads websites are officially licensed to provide this type information but hundreds of unlicensed websites also play on this market. Indeed, inconsistent information on pricing and planning is making transparency efforts difficult to be realised.

Although the Government issued Decree 117 dated November 12, 2015 on construction, management and use of housing and property information systems, information control is yet to be effective and impossible to keep up with the current development pace.

This has fuelled concerns about market bubble late in 2018. But, given cash inflows in the past, many industry experts believed that a property frenzy is unlikely in this period.

Concurring with Thanh, a representative from CBRE, a commercial real estate services and investment firm, also said that the market bubble is unlikely to happen in the interim because the market liquidity is quite stable. The market is also receiving positive signals as more end buyers make deals rather than speculators.

Luong Tuan

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