The 4th outbreak of the Covid-19 epidemic signals difficulties for the real estate market in 2021. But that does not mean that the cash flow will lie still, but will tend to “sand for gold”.
Domestic cash flow towards land-attached real estate
Looking back at the development of the real estate market recently, it can be divided into three main phases: The first period from 2017 to 2019, this is a blooming period. of many projects nationwide, especially in Hanoi, Ho Chi Minh City, Quang Ninh, Hai Phong and other localities developing tourism with condotel products and resort villas. For a long time, the real estate project in the project has attracted and received great attention from investors and customers in the market. However, after hot development, real estate in the project, especially resort products, has slowed down.
The second phase is from the end of 2019 to the beginning of 2021, the supply of projects in the market continues to be scarce and investment demand is still increasing strongly, the “fever” of land plots spreads in the coastal provinces. However, after reaching a high price, the real estate market also slowed down. Along with that is the tightening of local management, making the cash flow into this market no longer as vibrant as before.
The third phase is the second half of 2021 to 2022, which is also the expected period of post-Covid-19 recovery. Many forecasts have been made about the direction of cash flow of the real estate market. Accordingly, investors will focus on real estates on land that are capable of profitable business exploitation.
Mr. Nguyen Quoc Anh, Deputy General Director of batdongsan.com.vn said: “It is clear that when investors put capital into any channel, that channel must have a profitable element, they will not put into an unprofitable investment channel. , including production. During this period when Covid-19 broke out, production faced a lot of difficulties, cash flow will have to find somewhere profitable such as securities and real estate, which are also two good investment areas in this period.
According to Mr. Quoc Anh, the Covid-19 epidemic is only in the short term, while stock investment is like a psychological game, people panic when the epidemic comes, causing the value to drop. But the business is still doing well, the return of investors makes the value increase. Besides, cash flow tends to move, cash flow into securities usually precedes the wave of real estate by about 1 year. After the cash flow is fixed, it will be pushed to real estate, and so the real estate value must also increase. Looking back at the 2007 – 2009 period with the international and Vietnamese markets, it is seen that the stock wave goes first, the real estate wave follows, and up to the present time, it is inevitable that investors have money to invest. Don’t let the money lie dormant.
Analyzing more money flowing into industrial real estate, this expert said: “Currently, the price of industrial real estate in Vietnam is lower, even half the price of some countries. like Indonesia. We have analyzed that in 2019 the opportunities for industrial real estate are very close, and in fact, by the period of 2020 – 2021, many markets are increasingly attractive.
The heat not only rents, but also the value of industrial real estate stocks increased strongly. Investors expect the new cash flow to invest as well as the development of the industry to make businesses more profitable and the local economy to develop. The potential is there, but whether we can meet the potential is still a big question.”
Accordingly, Mr. Quoc Anh said, the construction planning must be so that the entire industrial park is like an urban population of the city. There are kindergartens, hospitals, central areas, amusement parks so that workers there do not have to go far. In the morning they go to work, in the evening they come home only 2-3km away. Currently, we have just gathered the vacant land to rent, so the price of industrial real estate is cheap, of course. Vietnam is still in the early stages of building an industrial city. Therefore, this segment is considered to have great potential for development and will attract investors in the future.
Ms. Do Thu Hang, Senior Director, Research and Consulting Department, Savills Hanoi, said that despite the Covid-19 epidemic, the market had a large amount of money coming from securities investment, leading to real Real estate or real estate attached to land attracts considerable attention from investors.
In some areas, land prices and land-attached real estate prices are also at reasonable levels when compared to other real estate products such as apartments for sale, condotel products pending legal proceedings, or high value products such as resort villas. These phenomena lead to a very strong demand and transactions for land in recent times.
An expert from Savills said: “It is a fact that we realize that real estate, especially residential real estate, is always an attractive long-term investment channel, one of the options for diversification. investment channel of investors. From now until the end of the year, real estate is still an investment channel targeted by many investors because it is relatively safe compared to some other channels. Combined with the sentiment that real estate is an asset to store and home loan interest rates are low, it can be assessed that the housing market will continue to have many exciting developments.
FDI flows to 3 areas
During the continuous outbreak of Covid-19, FDI inflows also made certain adjustments. From 2020, FDI capital will still pour into the manufacturing sector, creating favorable conditions for the real estate industry to also have positive changes. In addition, with positive growth in 2020 despite the impact of the Covid-19 epidemic on economic activities, Vietnam is becoming a good candidate for value chain transformation in Asia. .
Assessing FDI activities in 2021, Mr. Matthew Powell, Director of Savills Hanoi said that international investors are very interested in Vietnam and affirmed: “The investment environment in Vietnam is currently being improved. improved compared to many years ago and Vietnam is holding great advantages in terms of investment environment, political stability, and capital management policies that are attractive to foreign investment.
This result is achieved thanks to two factors, firstly, Vietnam holds the fundamental advantage of being a large market with young, dynamic and increasingly high quality human resources. The fundamentals that make Vietnam so attractive remain unchanged. The development of Vietnam’s real estate is based on income growth, demographics and urbanization. The rapid growth of infrastructure in Hanoi and Ho Chi Minh City is supported by the interconnectedness of the provinces. Before Covid-19, Vietnam was in a good position, but even in the period when the epidemic had many negative impacts on the global market, Vietnam still performed better than many other markets.
Second, the investment environment in Vietnam is gradually improving, with significant support for the manufacturing, trade, service, import-export and real estate industries. There are attractive investment opportunities for foreign investment in Vietnam, such as the Government creating opportunities for foreign investors to participate in land auctions and legal barriers being actively removed. .
“In 2021, 3 areas that attract the attention of FDI investors include residential real estate, office real estate and industrial real estate. Especially in 2020 and 2021, the demand for offices will grow strongly. With so many projects under construction, the new supply is likely to make the office segment much more competitive,” forecasted Savills Hanoi Director.
However, this expert also said that foreign real estate investors and developers will still face certain challenges when participating in the Vietnamese real estate market. He analyzed: “The difficulty of investors is also related to investment quality and accessibility. For example, for foreign investors, quality infrastructure such as roads, ports and railway systems is extremely important. However, provinces with a lot of economic space have limited infrastructure, causing difficulties in accessing raw materials or problems in transporting products.
Therefore, it is important that the project is located in an area with easy access to key partners and convenient transportation. A clear, well-executed strategy and a solid financial plan are essential for investors. Vietnam is in need of more Industry 4.0 solutions for smart, high-quality and transparent projects so that FDI can easily invest in it”.