Property Insight: An insight into Vietnam’s thriving property market

Converging many favourable conditions with social, cultural, political, and economic advantages, Vietnam has emerged as a thriving and fast-growing market in Southeast Asia and become one of the most-preferred property investment channels among both local and international investors.

Nevertheless, huge investment opportunities usually come with high risks, especially in a young and immature market where real estate investors and homebuyers lack a formal, professional, and trustworthy information source with diverse views on investment. Little wonder that the Property Insight programme has received such a warm welcome.

Ultimate guidelines from top experts

The demand for property investment in Vietnam has increased significantly since 2015 when property ownership was first opened to international investors. The market has been receiving increasing interest from Asian investors taking advantage of the bargain prices in comparison to other Asian countries like Singapore or Thailand.

Though the local real estate sector is growing at a satisfying rate, it is still fraught with uncertainties, with more projects now waiting for approval since newly-established property firms soaring. The young and opaque industry with unsystematic and insufficient information, along with the shortage of multifaceted, in-depth analysis have been making purchasing or investment decisions a lot tougher.

With the goal of moving the local market towards a transparent real estate business environment where investors and homebuyers would have enough information and research-based data on both micro- and macro-markets, the Property Insight programme was created and has gathered leading professionals and top industry insiders from many sectors to provide ultimate guidelines for accurate and long-term investment.

There are two different views of investment, especially in real estate, according to Vo Huynh Tuan Kiet, associate director and head of Housing Project Marketing at CBRE Vietnam.

“Foreigners from developed countries look at Ho Chi Minh City as a place where they can put their money down. They appreciate the emerging stage of the market because they can see the potential of the city. The value of their investment will increase day by day, year by year, by 20-30 per cent or maybe even double the original investment,” Kiet insisted in Episode 3 of Property Insight titled “Liveable City”.

On the other hand, local investors also appreciate this city’s developing status. Despite some delays and issues, Ho Chi Minh City still has room for investors to double-down on their investment.

As long as the city keeps changing, infrastructure is still being developed, residential areas are being planned, and new buildings and commercial sites are rising up, there will always be opportunities for investment, he added.

Multi-dimensional views needed for sound investment orientation

Many experienced specialists from different episodes of the programme have provided viewers with diverse angles from the property market outlook, potential investment locations, to real estate credit policies or specific housing segments.

With the government’s tightening policies on real estate credit, Vietnam’s property mortgage market has been the apple of investors’ eye and has seen rapid development.

“This has been driven by associated economic changes taking place, which includes a very high urbanisation rate leading to a huge demand for apartments, especially in Hanoi, Ho Chi Minh City, and other major areas,” Sanjay Chakrabarty, OCB’s deputy CEO and head of Retail Banking, explained in Episode 8 about “Mortgage”.

“On the other hand, consumer credit has almost doubled in only a few years, 50 per cent of which has come from the mortgage,” he added. “Home ownership is a good thing and it’s the first step to wealth creation.”

Sanjay Chakrabarty and the panellist (third from the left)

Under a property developer’s perspective, SonKim Land’s CEO Andy Han, noted in Episode 8 that around 40-50 per cent of the developer’s customers are foreigners who are ineligible for loans in Vietnam. However, the rest are locals and only 10 per cent are getting loans from banks. This rate is significantly lower than in South Korea.

In fact, CBRE’s statistics show that buyers in the affordable and low-end segments tend to borrow more than those in the luxury and high-end segments because the latter are mainly investors who do not need to take up loans.

Particularly in the shophouse segment, although some said this has been a channel where sales were difficult, Andy saw many customers who owned more than one shophouse in many projects.

“All shophouses produce pretty decent rental yield, around 6 per cent. I think this is a good investment for those who are looking to invest in different types of real estate assets,” he said.

“Again, it could be really easy for developers to sell or could be a headache depending on the location as well as the customers’ investment targets,” he said in Episode 7 about “Shophouse”.

Andy Han discussing shophouse investment

Comparing the value of a shophouse and a residential house, Chinh Tran, leasing manager of Retail Services at CBRE Vietnam, revealed a shophouse could fetch 25-100 per cent more than an upper-end apartment.

However, much depends on the location, and a shophouse’s value is not sky-high from the get-go but rather increases quickly and very high compared to apartments in the later stage of operation.

Offering leading experts and top industry insiders’ expertise in various sectors from economics and culture to real estate consultancy or project development, the audience could glean useful facts and figures as well as learn precious lessons from demonstrated analyses of property investment. The Property Insight programme is also becoming guidance for both local and international investors and homebuyers looking to be confident about their real estate investment decisions.