Long-term Property Preferred, Not Hit-and-Run

9:21:03 AM | 6/25/2021

The COVID-19 pandemic not only changed all plans of investors but also made investors in Vietnam more cautious. The long-term investment trend is clearly taking shape in the market. That is also the reason why investor confidence is still quite strong despite the complicated development of COVID-19 pandemic.

According to some experts, the COVID-19 pandemic is exerting a strong impact on property investment trends in Vietnam. It is quite clear that the market is now not for the so-called hit-and-run strategy but a race for long-term investors. This means that real estate is still a money-spinning investment option for investors with medium- and long-term approach.

Sharing with the press recently, real estate expert Tran Khanh Quang said, this is the time for long-term investors to pick up true products. Projects eyeing short-term needs are gradually being replaced by long-term investment projects, both in scale and quality, to meet end-buyer needs. This is an opportunity for long-term investors because they always aim for a profit in 3-5 years, not in a short time.

“After the pandemic, the market will certainly face certain difficulties. This once again helps long-term investors opt for a clean and reputable product with less competition. Interest rates on housing loans have declined while investors have introduced reasonable pricing policies and product incentive packages, which also bring many favorable opportunities for investors and customers with real housing needs,” he said.

Sharing the same point of view, Mr. Mai Duc Toan, Sales and Marketing Director of CNT Group, said that many investors do not hesitate to invest their long-term money in real estate. When the land frenzy is weakening, investors should opt for medium- and long-term investment.

“We shouldn't expect much from hit-and-run investment now and in the next few years because Vietnam's real estate market has established a new price level on a large scale in the past five years. However, this does not mean there is no room for short-term investments. If well calculated, investors can still “buy fast, sell fast for profit” but, I think, the chance of success will be lower than years ago," he emphasized.

After the land frenzy and COVID-19 outbreak, investors should comprehensively reassess the market and arrange suitable investment portfolios. In addition, most investors will be more cautious about planning information, which is a necessary lesson for the real estate market to develop in a more transparent and sustainable direction. Accordingly, medium- and long-term investments will bring many investment opportunities for investors.

Speaking to the press earlier, Mr. Dinh Minh Tuan, HCM City and Binh Duong Branch Director of Batdongsan.com.vn, said that capital inflows will be still focused on the main investment channels - securities and property - in 2021. Given very low deposit rates at banks, weakening appeal of non-yield gold and unattractive corporate bonds, the stock market is a shelter of choice for now. However, for medium and long-term investors, real estate is the most preferred playground. The Vietnamese investor sentiment is always optimistic about property price hikes because the population is kept expanding while the land cannot be expanded.

In this context, many experts advised this to investors when they entered the market. For the time being, investors need to be alert in the market. If buying real estate for a sure profit, it is advisable to buy more. If buying for a belief in a higher price in the future, it is simply a game of gambling because others may not share the same belief. And, the belief is placed on an overpriced property, it is really high risk.

Investors should also note a number of factors that need to be avoided during and after this sensitive time like herd-driven investment, beyond-financial-capacity investment or one-for-all investment. In particular, excessive financial leverage should be avoided because pressures on principal and interest payment will be very high (given the loan accounting for 50 - 80% of the value). If liquidity is poor, investors will lose their expected profit over time or even sell off their property at low prices to repay loans if they run out of cash.

Besides, to ensure a safe capital flow during this period, investors should look to well-reputed investors and projects/products with transparent legality.

“Given the ongoing pandemic, investors should be careful about each transaction decision. Currently, the cash flows into real estate sourced from remittances, savings and business are slower than at the start of the year. Only when the COVID-19 pandemic ends and signs of economic recovery become clearer, can we be optimistic about the health of the real estate market. The recovery of the real estate market depends on pandemic evolution,” Toan concluded.

Source: Vietnam Business Forum