China-Singapore Jingwei, May 8 (Gao Bining) Recently, a group of investors have flocked to the Vietnamese property market, expecting that Vietnam, which has a relatively young population structure and is undergoing industrial transfer, can replicate the gains created by the Chinese property market in the next two decades. .
Can real estate speculators bet on investment decisions in Vietnam's property market and get decent returns?
"Heavy warehouse Southeast Asia"
Since joining the WTO in 2006, Vietnam's economy has maintained rapid growth, foreign capital has continued to flow into the country, and investor demand has remained strong, driving the local real estate market to boom.
According to the Ministry of Planning and Investment of Vietnam, by the end of 2021, the total foreign direct investment in Vietnam will reach 31.15 billion US dollars, an increase of 9.2% compared with 2020.
Among them, foreign direct investment in the real estate business sector exceeded 2.6 billion US dollars, accounting for 8.3% of the total investment.
According to statistics from Vietnam’s Ministry of Planning and Investment, in the first quarter of 2022, the number of newly established companies in the country’s real estate business sector increased by 47.2% year-on-year.
On the other hand, in the first quarter of 2022, Vietnam regained its economic vitality, with a year-on-year GDP growth of 5.03%, the highest in the past three years.
In 2021, Hanoi, the capital of Vietnam, and Ho Chi Minh City, the largest city in Vietnam, once shut down real estate projects due to blockades. Now, as the country adapts to the epidemic, production and operations are recovering faster, and the local real estate market has also recovered rapidly.
According to data from the Ministry of Construction of Vietnam, in the first quarter of 2022, housing prices in Hanoi, Ho Chi Minh City and other regions continued to rise.
Recently, according to Vietnam's "Saigon Times" report, the Cheung Kong Group founded by Li Ka-shing, Japan's ORIX Group, and the Vietnamese company Wanshengfa Group discussed local investment matters with the leaders of Ho Chi Minh City.
There are rumors in the market that Li Ka-shing will invest in real estate in Ho Chi Minh City.
According to market participants who are deeply involved in the Vietnamese property market, the Vietnamese property market has already entered a growth stage.
Xue Chao, founder of First Hope Real Estate Vietnam Co., Ltd., told Sino-Singapore Jingwei that since Vietnam opened its doors to overseas buyers in 2015, the growth of the local real estate market has been relatively stable.
According to public information, from July 1, 2015, Vietnam officially implemented the new Housing Law, relaxing restrictions on the purchase of houses by foreign buyers, and foreigners can freely buy and sell real estate in Vietnam.
Xue Chao said that the real estate boom in various countries is the first move in coastal areas, and Vietnam is no exception.
"In each wave of interest rate cuts, coastal houses start to rise first. Slowly, everyone feels that houses are a bit expensive, and funds will be deposited into some so-called value depressions."
The particularity of Vietnam's real estate market lies in the ratio of its population to land resources.
Compared with Vietnam's population of nearly 100 million and an area of 331,000 square kilometers, "actually there are not many places for speculation", and the most concerned are still Vietnam's largest city Ho Chi Minh City and the capital Hanoi.
Can foreigners also "get on the bus"?
The Housing Law mentioned above also stipulates that the term of the right to use real estate property rights held by foreigners in Vietnam is 50 years, and can apply for renewal at the end of the term, with a maximum of 70 years.
In addition, the area and total number of houses purchased by foreigners are not limited, but the number of houses owned by foreigners in each apartment complex cannot exceed 30%.
Such regulations for foreigners also determine that foreign investors are subject to certain restrictions on purchase, holding, leasing, and resale.
Due to their limited understanding of the market and language barriers, many foreign investors who intend to buy property in Vietnam choose to entrust local real estate service agencies.
According to Xue Chao, after the outbreak of the epidemic, his company transferred a lot of publicity work online, and released a lot of original content about real estate investment in Vietnam on domestic short video platforms.
In the past month, the number of online inquiries he received has increased significantly, and some conversions have also occurred. "Now some people want to go to the local area, but they may need to wait until the customs clearance is relaxed."
On the other hand, Xue Chao also said that although the Vietnamese real estate market has been very loud recently, it may not be equally optimistic for the Vietnamese local real estate agents who focus on foreign investors. Not as high as some other countries, and while the real estate market is improving, a lot of agents are exiting the market.”
The reason, he believes, is related to the regulation of the local government.
"The Vietnamese government may be tightening the supply side. Many projects have been submitted for a long time, maybe a year or two, and have not yet received the approval. We are communicating with local developers, but (there is no construction permit), many The project can’t be started right now.”
Now real estate companies and intermediaries can only wait for the decision-making turn of the Vietnamese government.
Xue Chao believes that if the Vietnamese government wants to relax regulation, more projects will be approved, "But now we don't see any signs that there will be many projects in the second half of the year. Many projects in our hands are left in the late market. , which can be sold less.”
For real estate agents in Vietnam who mainly target foreigners, the rigid rule that "foreigners own no more than 30% of the houses in each apartment complex" has limited their listings.
Xue Chao said that with Vietnam's economic development in recent years, the local per capita income has increased rapidly, and the proportion of loans is relatively high.
On the other hand, foreign investors still need complex links such as approval documents, certificates, and foreigner property rights certification, "so many projects do not have the will to sell to foreigners."
Who will take over foreign investment?
For investors who do not understand the language and are not familiar with the local society and laws, many steps have hidden secrets.
If you follow the trend to buy a house, the investment may not be able to earn real money.
Xue Chao said that taking Chinese people buying properties overseas as an example, there are generally several types of risks, the first is exchange rate fluctuations, which may lead to erosion of investment profits; the second is the risk of changes in local policies, or the legality of foreigners to hold real estate and other issues 3. Problems that can only be handled and coordinated by the local team during the house purchase process.
Specific to the recent boom in Vietnam's property market, he reminded investors who are interested in entering the market that the current situation of Vietnam's property market has been the result of several years of fermentation.
Entering the market at this moment is the same as entering the market after the stock market has risen to a high level.
"It doesn't mean that the market has peaked, it just means that when choosing targets, you need to choose some relatively safe and excellent targets, so as to cross the cycle and get better returns in the long run."
In addition to several major risks such as exchange rate, policy, and localization, the most worthy of consideration for overseas investors also includes the realization of extreme situations.
"When the market is not good and the liquidity is not good, no one will pick up (property) no matter how the price is lowered. And once the economy is bad and extreme situations occur, there will be problems with the rental of these houses, so it will It is a domino-style collapse, which will cause investors to suffer relatively large losses,” Xue Chao concluded, considering the safety of real estate investment, in the next interest rate hike cycle, it is recommended that you do not do tourism or other activities in Vietnam. It is an investment in some small cities.
It is reported that the National Assembly of Vietnam has passed a resolution in November 2021 to set the GDP growth target for 2022 between 6% and 6.5%.
According to the Vietnam News Agency, in order to achieve this goal, the Vietnamese government has allocated a total of 15 billion US dollars in fiscal stimulus package support policies, and macro-control factors will continue to affect local real estate prices in the future.
(The opinions in this article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)