|Illustrative photo (Source: VNA)
During the conference titled ‘Real estate ownership trend: International experience and Vietnamese practice’ held by the Vietnam Real Estate Association in Ho Chi Minh City, Duong Thuy Dung, CBRE Vietnam’s Senior Director, said besides land with long-term ownership, apartments, villas and shophouses are preferred by domestic home buyers and investors in recent years.
Apartments, which have long-term ownership, have been offered for sale most due to high demand as local real estate buyers and investors prefer real estate products with long-term ownership, Dung said.
The total numbers of the apartments offered for sale in the country’s two largest markets of HCM City and Hanoi rose from 15,000 in 2008 to 63,000 last year while the number of apartments sold reached 55,000 from 8,000 in 2008.
Until now, home buyers and investors still prefer long-term ownership. Meanwhile, the number of the apartments in HCM City and Hanoi is only roughly 260,000, compared with the population of more than 23 million people.
"The number of the apartments is too modest compared to the demand while the supply is also too low," Dung said, adding there is huge room for the development of the realty segment.
According to Dung, in the first six months of 2019, the number of real estate products with long-term ownership offered for sale dropped significantly compared to the same period last year giving investors fewer choices.
Due to the reduction, substitute products, such as condotel, officetel and resort villas, that have an ownership time limit, have begun to receive attention from real estate investors. Buyers of the substitute products are mainly for investment purpose. In Nha Trang and Da Nang, for example, there are some 16,000 substitute products.
According to Dung, more than 70 out of 220 countries in the world regulate apartments for sale having an ownership time limit. The limit in Singapore is 99 years and the Philippines, 50 years.
In Vietnam, many projects have a long-term ownership. However, some others, even in some key projects, the ownership time limit is 50 years.
For resort real estate, the ownership time limit in Vietnam is 50-70 years, compared with 30 years in Thailand.
To encourage buyers of the substitute products with an ownership time limit, Nguyen Thi Thanh Huong, Dai Phuc Land’s general director, said developers should pledge profit return rates to make it attractive to buyers.
However, as some developers failed to meet the commitments in profit rates last year, investors are now also interested in the capacity of investors and operators, said Nguyen Hoang, Research & Development Director of DKRA Vietnam Company.