Vietnam’s real estate market through Forbes perspective

Minh Hoàng
April 17, 2021

– Office rental prices increase in 2020? Positive economic growth while the whole world is coping with the health crisis? In many parts of the world, this seems impossible, but in Vietnam, things are completely different – Forbes put the issue in a recent article.

– What Vietnam has done in the past year is very impressive considering the many health and economic challenges facing the world. Vietnam has well controlled the Covid-19 pandemic, this 96-million-people country has reported 2,631 cases of Covid-19 infection and 35 deaths by the time the article was published by Forbes.

– During the same period, Vietnam’s economy surpassed all competitors in Asia in terms of GDP growth rate. Vietnam’s economy in 2020 will grow by 2.9%, a very impressive figure compared to the GDP of some neighboring countries such as Thailand or Malaysia having GDP declines of 6.1% and 5.6, respectively. % in 2020.

– Vietnam’s real estate market has grown well in recent years, economic growth has pushed up real estate prices. Vietnam’s real estate market remained firm during the Covid-19 pandemic, the prices of industrial real estate and residential real estate both increased.

– Vietnam’s success in controlling the Covid-19 pandemic is directly attributable to the government’s quick action. When the corona virus spread outside the Chinese border in early 2020, Vietnam immediately closed its borders, schools and many types of businesses to prevent the spread of the epidemic.

– Thanks to such drastic measures, since the beginning of May 2020, the isolation measures have been removed, people have been able to restore normal life, the domestic economy has been operating stably while The world economy is still facing many difficulties, struggling with blockade measures. When factories reopened and construction projects resumed, the Vietnamese real estate market regained its growth engine.

– In the Vietnamese real estate market, the most prominent growth segment is industrial real estate, which benefits from the booming manufacturing industry.

– Many businesses such as Nike, Adidas, and Samsung have moved production out of China to Vietnam because of rising labor costs and production in China as well as China is in a trade war with the US. According to statistics, between 2010 and 2020, Vietnam’s exports to the US grew by 435%.

– Production demand increased, the market also reacted. Industrial real estate prices in Ho Chi Minh City increased by 9% in 2019 and by 10.6% in 2020, according to data from Cushman & Wakefield (data in this article mainly focus on the HCMC market. because the size of this sector is included in the total economic output of Vietnam).

– Vietnam’s residential real estate market has also grown unprecedented in recent years. Because the investment options of Vietnamese people are limited, the demand for apartments has outstripped the supply, many new projects quickly sold out just not long after opening for sale.

– Also according to Cushman & Wakefield, apartment prices in Ho Chi Minh City have also increased significantly and in a 3-year period from 2017 to 2020, there has been a very high increase in the year of pandemic 2020 by 12.8%.

– Of course, foreign investor demand is an important factor affecting the market, but much of the growth comes from Vietnamese citizens. Vietnam’s economic success combined with a growing middle class has helped bring important growth engines to the real estate market, but there are not many signs that this market will soon. growth slowed down.

– Around the world, the office real estate market is heavily influenced as many people choose to work from home and many businesses continue to choose a flexible working model, the prospects of the real estate market. so the office is not sure yet. However, in Vietnam, high economic growth pushed office rents in Ho Chi Minh City up 1.7% in 2020 while office rents in Bangkok, Singapore and Hong Kong all decreased significantly.

– Mr. Paul Fisher, Vietnam director of real estate company JLL, said that Vietnam will still choose the office model as number 1. He emphasized that the lack of interaction does not inevitably put pressure on people. people working in the same group, at the same time, most of them will still choose the office as the focus of business activities. While the future of office real estate is still quite bleak around the world, working habits in Vietnam do not seem to change much because of the short social gap and limited technological foundation.

– Like the rest of the world, 2020 is a tough year for the hotel real estate market, room occupancy is only 20-30% for most of the year. Although the market will only recover gradually, the market outlook is still good considering that before the pandemic, the number of international visitors to Vietnam has steadily increased over the years.