Prospects of the real estate market in 2021

Minh Hoàng
April 22, 2021

According to a survey recently conducted by the Vietnam Report Joint Stock Company (Vietnam Report), economists and businesses operating in the real estate sector are expected, in the first half of the year and For the whole year 2021, the real estate market will continue to recover and grow, even booming in some segments and certain regions.

It is forecasted that in 2021, the real estate market will continue to recover. Artwork: Danh Lam / TTXVN

– However, the trend of the real estate market in 2021 has not been clearly defined and depends on many assumptions and actual market fluctuations. Specifically, if Vietnam continues to control the epidemic well, the real estate market will surely flourish and recover well; It may even become the driving force for the whole economy.

– Determining there will be many difficulties for the real estate market in 2021, Mr. Vu Dang Vinh, General Director of Vietnam Report pointed out that the biggest limitation and also the biggest difficulty is the unpredictable development of the COVID epidemic. -19. Next, there are no documents on policies for new types of real estate such as Condotel (hotel apartments), Officetel (office apartments combined with hotels), Shophouse (commercial townhouses). ) … leading to still discrepancies between one locality and another. The process of licensing, appraising and approving construction investment projects is long, complicated and many stages. Limiting credit without revising the circular, businesses have difficulty in accessing cheap capital; Tax and transfer tax policies are still complicated, making real estate investors not really comfortable.

– Facing this situation, according to Mr. Vinh, there are 6 factors to help businesses overcome difficulties due to the impact of the COVID-19 pandemic, especially in 2021. That is, promptly propose scenarios to cope with the situation. disease outbreaks; building prestige and brand name in the market; prepare healthy financial potentials; proactively review, cut and use costs effectively; focus on developing new markets and enhancing digital transformation in management and sales …

– Accordingly, the role of building prestige and brand name in the market is the most important role in helping real estate businesses overcome the difficulties of COVID-19 epidemic. Because, in the process of using Media Coding method, Vietnam Report has assessed the reputation of businesses in the real estate industry through their presence on influential media channels. in the period from January 2020 to the end of January 2021. Nearly 54.4% of businesses studied have the average frequency of appearing in the media once a week; of which, Vinhomes is the business with the highest number of coding units (encrypted information units).

– The report of Vietnam Report also pointed out 5 factors that create the strongest impetus for the real estate market in 2021. That is removing bottlenecks in real estate policy; ability to control disease; endurance and resilience of the economy after the COVID-19 pandemic; FDI flows into Vietnam and interest rates fall.

– Mr. Vinh analyzed, by 2020 the real estate market will slow down. One is due to legal procedures, when there are many overlapping laws, the highest point is in the period 2019-2020. State management agencies, legislatures also understand this issue, initially having circulars, decrees, instructions to answer questions and problems left in the 2019-2020 period. Therefore, the year 2021 will have more favorable legal procedures for the real estate market.

– Besides, the biggest motivating factor is the disbursement policy for public investment. This is considered a lifesaver when everything is delayed, the determination to disburse public investment is the most powerful policy in 2020 and 2021.

– About the ability to control the disease. When COVID-19 appeared, it reduced the purchasing power of the whole 2020 economy in general. Not only tourism, agricultural products, and commerce, but also in the real estate industry, the purchasing power of the market is also significantly reduced. Except for localities with special developments such as Tp. In Ho Chi Minh City, although house and land prices have increased, purchasing power is still good. In some localities, including Hanoi, not all prices can be sold.

– Third, stamina and economic resilience. In terms of general rule, the market has times of going up and down with a sine wave, but in 2020 it has dropped to a very low level. Research by Vietnam Report shows that Vietnam’s economy is in the recovery phase, Vietnam’s GDP in 2020 will increase by 2.91%, the lowest level in the past 10 years.

– In the Asia Pacific region, Vietnam is one of three countries with positive growth, including Vietnam, China, and New Zealand. With such growth rates, of course, very low, but emerged as one of the economies of positive growth in the face of a strong epidemic worldwide. Vietnam will continue to recover in 2021 and the GDP growth desired by the Government is about 6%. This is a challenging growth for the Vietnamese economy but feasible. With the premise that Vietnam’s economy continues to recover and grow, accordingly, the real estate market will also continue to recover when there are advantages and ripe opportunities.

– As for the inflow of ODA capital into Vietnam. Under the impact of the US-China trade war, Vietnam’s strong commitment to a new generation of Free Trade Agreement and more importantly, Vietnam still ensures its capital flow until it is in the growth zone, the political economy, the society is stable and the country and people want to rise are the three factors that attract capital flows to Vietnam. Therefore, FDI in real estate is expected to increase strongly in the coming time because a large amount of capital from newly established real estate investment funds is ready to enter Vietnam.

– Along with the increase in exports due to the benefits from the signed trade agreements, tourism will warm up and more foreign investors will gradually be allowed to enter Vietnam. In addition, the flexible macroeconomic and microeconomic policies, and flexible adjusted financial policies … will contribute to promoting and creating a push for the real estate market to heat up.

– Finally, according to Mr. Vinh is the interest rate factor to decrease. When the gold market has many risks, the foreign currency market is tightly managed and does not bring interest rates, the inevitable trend is that the cash flow will strongly flow into the stock market. Many investors borrow money to invest in stocks. Stocks, if they continue to increase strongly as at present, may lead to bubbles. But if all real estate procedures are removed, the market returns to normal levels and there are adjustments to create a more balanced development for the whole economy. At that time, compared to the securities investment channel, real estate investment was more stable, although the resort real estate segment was strongly affected by the epidemic.

Regarding the Government’s policy, the recently lowered interest rates have greatly supported the real estate market on both sides, including traders and real estate builders when they can borrow money from banks. Low interest rates, reducing capital costs and good support in real estate construction. Real estate buyers also benefit from borrowing money at lower interest rates. The low interest rate policy has supported the real estate market. This policy should be maintained, but there should be a balance with inflation control, Mr. Vinh noted.