Forecast For Vietnamese Real Estate Market In 2017

Most experts say that Vietnam’s real estate market in this year will cool down, the scale will be reduced considerably by the decrease of the speculation. Will this happen?

Below are forecasted for a Vietnamese real estate market in 2017 with new trends.

Vietnam’s real estate market is facing many difficulties

Will Vietnamese real estate market in 2017 go in any direction?

Some experts believe that the real estate market in Vietnam will be strongly differentiated, only some local projects have financial advantages that can be consumed advantageously. Some of the implemented projects will be completed. Some start-up projects may be postponed.

Credit sources from the banking system for the real estate market have been narrowed, commercial banks have not the surplus of short-term funds under the regulations of the State Bank of Vietnam, which has been applied since January this year, the pressure of bad debts are estimated at $5 billion.

The segment of social housing and low-cost apartments will be the focus of the market development in the next phase, so this segment is in need of government support policy.

About the real estate market in 2017, it can evolve in three directions. Firstly, the market grows better than 2016. This is what many people want but most likely it will not happen. Secondly, the market moved sideways, some patches declined and some segments improved. The market will witness a marked change in product structure and this is most likely to happen. Finally, that is market decline. People never expected this to happen, but it can happen if there is economic instability in the world or region.

Which are segments growing?

Some experts believe that in 2017, the real estate market in Vietnam will continue to develop well.

Some segments have strong growth opportunities such as medium and low commercial housing segments, social housing. The high-end segment will continue to grow, but there will be a divergence. This is due to the influence of state policies and the process of restructuring product on the market.

The trend of intelligent, green, saving energy products that appeared in 2016 will continue to grow stronger and be in line with the global trend in 2017 to bring the great, full and economical utilities for consumers. Investors will also be more interested in this trend to increase the competitiveness of the product.

Vietnamese real estate is invested by many foreigners from the early years of the renovation and international integration

The evidence is that from 1988 to the end of October 2016, Vietnam has received 2,115 FDI projects with registered capital of 290 billion and 682 million USD, there are 562 real estate projects with registered capital of 55 billion 973 million USD.

Situation of real estate market in Ho Chi Minh City

Japan, Korea, and Singapore are the three leading FDI countries in the Vietnamese real estate market, with South Korea accounting for 31.9%, Japan ranked second with 10.9% and Singapore ranked third with 9.8% of total investment.

In 2016, with 66 projects worth nearly $1 billion of registered capital, real estate ranked second after manufacturing sector. Although the figure is lower than in 2015 the quality of the projects and the proportion of FDI make higher.

Foreign investors are now quite sensitive to the market, they not only take part in the high-end segment of luxury hotels but also promote cooperation in medium and good product development in order to meet the demands of Vietnamese people with the standards of Korea, Japan, Singapore …

Why is the real estate market of Vietnam attractive to foreign investors?

In addition to the causes of the investment environment in Vietnam has been significantly improved, to create more advantages than other countries in the region, there are two factors associated with the real estate market.

One is the rapidly growing middle class of Vietnam, which is identified by the bank at the fastest rate in Southeast Asia. 2012 is 12 million people and increase to 33 million by 2020.

Second, the Vietnamese government has allowed foreigners owned the houses in Viet Nam to make the difference in the market, especially in the premium segment. They enjoy a profit margin of 7 – 8% for Vietnam market, while it only gets 1 – 2% in other countries. This will attract large amounts of FDI to the real estate market, especially the projects with good location, beautiful design, and good living environment.

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