Weaker VND drives cash to real estate market
08-09-2015 10:58:14+07:00
Weaker VND drives cash to real estate market
The dong devaluation has caused changes to the cash flow: it will help heat up the real estate market. However, the dong/dollar exchange rate adjustment will not influence property prices.
The supply comes mostly from domestic investors, while foreign investors only provide 10 percent of products.
However, CBRE has warned that the selling prices will be affected once the dong depreciation leads to higher inflation.
The Vietnam dong has depreciated by -0.9-5.8 percent per annum, while the average apartment price in Hanoi fluctuated by -11-13 percent per annum in the last five years.
According to the consultant, real estate prices affect supply and demand more than the exchange rate.
To some extent, the dong price fluctuation may affect the selling prices in the future. Only the investors who have imported materials for their projects will not be hurt by the more expensive dollar.
Foreign investors, whose targeted profits are calculated in dollars, may have to raise the selling price in dong, even though the exchange rate fluctuations had been considered in their investment plans.
However, as only 10 percent of projects are implemented by foreign investors, a possible rise in rice prices will not affect the market.
CBRE’s analysts noted that investors will pay more attention to the real estate market as a result of the weak dong.
The forecasts about the US FED’s possible move to raise the prime interest rate has appreciated the greenback and made gold less attractive. The gold price dropped to a 5-year low in early August.
Tran Thanh Hai, president of VGB, a gold & investment company, also said that the cash would flow from bank deposits to the real estate market, and that cash flow was ‘inevitable’.
Hai believes that the houses priced at around VND1.5 billion would be the best sellers in the time to come.
Meanwhile, an analyst said he doubts the dong depreciation would warm up the real estate market.
“The announcement on the dong devaluation was released a couple of weeks ago. The real estate price has dropped to its deepest low as commented by analysts. Why hasn’t the price gone up yet?” he said.
According to the analyst, the Chinese yuan devaluation will in no way affect Chinese investment in the Vietnamese real estate sector.
China has registered $8 billion worth of investment projects in Vietnam, but mostly in the fields of manufacturing and infrastructure.
