Thriving

In 2009, despite the global economic recession and a decline in domestic economic growth, the real estate market quickly rebounded and contributed to preventing economic downturn, stabilising the macroeconomy and ensuring social welfare.

Deputy Minister of Construction Nguyen Tran Nam said that the buoyant real estate market is due to the huge demand for housing and commercial real estate.

Investment in the real estate market continues to rise rapidly, despite the global economic downturn. The Government issued suitable policies and guidelines to help the market develop. Investors then shifted their investment to affordable housing to increase liquidity.

According to CB Richard Ellis, 5,067 flats were offered for sale in the first quarter of this year, equal to one-third of last year’s total supply. Medium level houses accounted for 91 percent of the newly-built and the remaining were top end housing. The first quarter of this year also saw an increase in the sale of luxury houses.

Together with Hanoi’s expansion to the west, most of the major apartment buildings were built in Cau Giay, Dong Da, Ha Dong and Tu Liem precincts. 87 percent of apartment buildings in this quarter were located in districts of Hoai Duc, Thanh Tri and Ha Dong. The infrastructure has been improved and transport services to the city centre are getting more convenient, making the western areas attractive to investors.

According to Richard Ellis, the cost of hiring class A office in Hanoi fell by 3.55 percent in the first quarter compared to the previous quarter to US$42,16 per m² while the price of class B office remained stable. The availability of class A offices dropped by 9.2 percent while that of class B offices increased by 3.52 percent to 21.56 percent.  

Signs of overheating

In 2010, Hanoi will finalise its zoning plan for development, while Ho Chi Minh City will adjust its own decisions. Some large-scale investment projects, which are being put into action, will have a positive impact on the development of real estate market.

Experts predict that the real estate market will soon pick up. Vietnam’s economic growth in 2010 will likely be at a level equal to or a little higher than the 2009 figure. Judging from what happened, early this year, the government is determined to control inflation at no more than a double-digit figure. This is the most important factor in ensuring the stable growth of the real estate market.

On the other hand, the government has allowed commercial banks to control the deposit and loan interest rates, which makes it easier for the thriving real estate market. Nevertheless, massive credit expansion into the real estate market will create risks, and a bubble effect.           

In early 2010, the stock market also showed signs of growth. The VN-Index at the beginning of March reached 530 points, which is considered advantageous for the development of the real estate market. However, changes in the stock market and the increase in prices on the gold market have resulted in investors shifting to other markets to secure their capital.

Housing analysts say the real estate market in 2010 will continue to pick up because of the increasing demand for housing and commercial premises, especially in Hanoi and Ho Chi Minh City.

In Hanoi, the real estate market has already become over heated, which worries both investors and prospective home owners. The “hot” real estate market is not just in the western part of the city but has spread to Tay Ho, Gia Lam and Dong Anh districts.

In addition, not a few real estate agents keep pushing up prices, which in reality is just a false impression. For those people who are misinformed, they rush to buy land, causing real estate prices to rise at a dizzying pace. This also makes investors be at high risk if the market is not giving off any warning signals.