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Property market sees recovery in Vietnam

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    Asia News Network/Viet Nam News

Hanoi   /   Mon, February 22, 2021   /   09:43 am
Property market sees recovery in Vietnam Cows walk past a construction site in Hanoi on January 6, 2021. (AFP/Nhac Nguyen)

Vietnam’s Construction Ministry has reported that the domestic real estate market has overcome the most difficult period of the COVID-19 pandemic as a result of positive developments in the market, as well as the whole economy in the fourth quarter of 2020.

The country’s property sector is considered the bright spot of the domestic market with the European Union - Vietnam Free Trade Agreement (EVFTA) coming into effect and plans for the relocation of many multinational corporations to Vietnam, according to the ministry.

Vietnam’s successful disease control is also an important factor in attracting more foreign investment. Those factors will lay a good foundation for the real estate market to develop stably in 2021, a representative of the ministry said.

In the fourth quarter of 2020, most businesses in the real estate sector started operating again.

Although the market still faces many difficulties, real estate developers have offered solutions to attract customers, such as changing areas for developing property projects to catch up with trends of shifting foreign direct investment (FDI) inflows and urbanization in localities outside big cities, according to the ministry.

Thanks to product handover activities, project share transfers, asset liquidation and the development of industrial real estate, some real estate businesses have made record profits. Nearly 80 big real estate companies have achieved or exceeded their after-tax profit goals.

The domestic real estate market in the fourth quarter of 2020 recovered significantly compared with the deep reduction in previous quarters of last year following a rebound in the housing and industrial zone segments, helping the property sector maintain positive growth for 2020.

In 2020, the real estate sector contributed about 4.42 percent of national GDP. In 2020, the real estate industry also suffered setbacks. The number of newly established enterprises was 6,694, down 15.5 percent compared with 2019, while 978 enterprises completed dissolution procedures.

According to the Construction Ministry, the total outstanding debt of the real estate sector in 2020 increased quarter by quarter. The debt reached 8.3 trillion dong (US$361 million) in the first quarter and hit 8.5 trillion dong in the second quarter and 8.6 trillion dong in the third quarter. As of Dec. 31, 2020, the debt reached more than 8.8 trillion dong.

Besides banking loans, property companies in 2020 attracted capital from other sources such as individual investment capital, remittances and capital from issuing stocks and bonds.

Regarding the supply and transaction of real estate products, the ministry’s representative said by the end of the first quarter of 2020, apartment inventories on the market were estimated at nearly 13,000 units.

In the second and third quarters, the negative impact of the COVID-19 pandemic, as well as problems in terms of mechanisms and policies, affected the progress of implementing investment procedures of property projects and also the progress of implementing those projects. So, the market did not have significant growth of new supply in those quarters.

However, the real estate market was still a safe investment channel so apartment inventories reduced to 6,000 units at the end of the third quarter of 2020. Entering the fourth quarter, the market had a new supply of nearly 30,000 apartments and transactions were still quite stable. 

The ministry reported that last year, the domestic market had a total inventory of apartments of about 9,000 units nationwide. They are mostly located in Da Nang, Khanh Hoa, Kien Giang and Binh Duong.

Meanwhile, the property market in Hanoi, Ho Chi Minh City, Quảng Ninh and cities with strong urbanization such as Can Tho, Long An and Dong Nai maintained stable development with a moderate level of apartment inventories.