|Illustrative photo. (Source: VNA)
According to its most recent report, residential real estate is experiencing a short-term negative impact as travel bans are preventing buyers from visiting and closing deals, especially given that China, the Republic of Korea, and Japan account for a large proportion of foreign demand.
Developers, however, have prepared strong project pipelines in order to be ready when local and foreign demand return to previous levels, as Vietnam still has among the lowest real estate prices but highest rental yields in the region.
This is a difficult period for local and international property investors, according to Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam. In his opinion, for cash-rich investors with experience in the sector, however, it is also a time of great opportunity in Vietnam and overseas as those that have over-extended undertake rapid divestment.
He noted that one trend on the rise since last year is investor groups seeking to partner with others to develop larger-scale M&A opportunities. There are deals of this nature in Vietnam currently under negotiation and valued at well over half a billion dollars in total, Khuong added.
A variety of government incentives have been put in place in response to the challenges posed by the outbreak, including tax breaks and the suspension of tax payments and land rentals for businesses hurt by the COVID-19.
A credit package of VND250 trillion (US$10.6 billion) and supportive measures such as rescheduling and reducing interest rates, maintaining current loan classifications, and reducing fees, among others, will also be offered to enterprises facing difficulties due to the outbreak.
In order to support enterprises and improve the business environment, the Government has also asked relevant authorities to review and reduce administrative procedures and speed up the disbursement of investment capital.
The latest robust Government directives are being implemented to support property and business throughout this period of slowdown. “With increased liquidity and a potentially rich investment environment, we anticipate that when the pandemic eases, more and more investors will pour new capital into Vietnam’s real estate sector,” Khuong said.