The gap between supply and demand in the Vietnam real estate market has offered good opportunities for investors.
“Despite attracting many domestic and foreign investors, the Vietnamese realty market has to date showed its imbalance between supply and demand, particularly in big cities like Hanoi and HCM City. However, this makes the market attractive to experienced investors”, said Peter Ryder, general director of Indochina Capital Corporation at Investment Forum 2009 held late July this year.
According to Indochina Capital Corporation, the increasing urbanisation pace in big cities and the young population of below 35 years old accounting for 70 per cent of the country’s population have created new cultural features. More and more young people wish to have their own houses due to the increasing income, while, the local government is offering more incentives for realty investors. Vietnam has allowed foreign investors to hire land or houses at least for 50 years and the housing law also permits realty firms to mobilise capital their customers’ advanced capital at the maximal level of 70 per cent of contracts to buy or hire houses.
Besides, Overseas Vietnamese can own realty projects and some groups of foreigners are permitted to own houses in Vietnam. These are also important factors to boost the local realty market in the coming time. But, not all segments of the Vietnamese real restate market have developed over the past time. Even, offices for rent have faced difficulties as rentals have dropped by 20 – 30 per cent in Hanoi and HCM City.
Peter Ryder said housing segment is among main driving forces to accelerate the market’s demand. The ratio of people who really need to buy houses are overwhelming speculators because in early months of this year, the demand to buy apartments soared thanks to subsidised loans. Experts said individuals’ housing ownership demand is rising, leading the growth of the Vietnamese market’s mortgage lending market with diversified services offered by banks like HSBC and Standard Chartered. The services allowed millions of people to buy houses.
Nevertheless, Peter Ryder said, in spite of high realty demand, many negative factors are impacting the Vietnam real estate market. The local stock market’s recovery has slowed down the capital flow in the realty sector. Meanwhile, new moves from local concerned agencies showed a possibility of another monetary tightening policy in the near future. This will be a great challenge for both real estate firms and their buyers.
Ngo Xuan Dung, Director of Vietnam International Bank (VIB)’s Ho Chi Minh City branch said realty loans have been key services of many banks. Banks can expand or narrow the services in different period. The current time is an opportunity for the realty market due to people’s increasing demand for stable living condition and investment. Therefore, lots of banks have continuously launched services for house purchase. But, several recent signs in the credit market have worried economists. Realty credit, just disclosed by banks, has been narrowed to prevent the inflation risk.
Over the past time, despite competitive realty credit products launched, Dung said most of banks have paid attention to utility products to attract customers, not loosening credit lending conditions as each bank attend to risk management, particularly consumption loans.
Currently, VIB has still reduced loans to real estate projects. To get loans, customers have to prove their stable income and mortgage assets. Realty credit limits are balanced in line with credit and service products to help banks control risks in case of the market changes.
Luong Tuan
Vietnamese
