Forbes: What does the current real estate market’s incredible growth show about Vietnam’s economy?
Office rentals increase in 2020? Positive GDP growth during the global health crisis? These things seem impossible unless you live in Vietnam, Forbes said.
The list of Vietnam’s miracles in the past year is remarkable in the context of the current economic and health situation in the world facing many difficulties. Vietnam has had amazing success despite Covid-19, a country of 96 million people, but only 2,631 cases were infected and 35 cases died.
During the same period, Vietnam outperformed all Asian rivals in terms of economy with GDP growth of 2.9%, a remarkable feat as the GDP of neighboring countries Thailand and Malaysia fell. 6.1% and 5.6% in 2020.
“The country’s real estate market has demonstrated resilience during the pandemic,” wrote Forbes. “In particular, the highlight of the local real estate market is the industrial park, which has benefited from the production boom.”
Industry
In recent years, companies like Nike, Adidas and Samsung have moved out of China and invested in Vietnam, due to the growing cost of Chinese production and the trade war with the US.
Trade data has shown this change. Vietnam’s total exports to the United States increased by 435 percent between 2010 and 2020.
Look at the TP market. HCMC – the city accounts for 20-25% of the country’s GDP, the industrial real estate market has also responded to the increased production demand, when industrial rental prices in the city. HCM increased by 9.0%. in 2019 and 10.6% in the 2020 pandemic year according to Cushman & Wakefield.
House
The Vietnamese housing market has also experienced unprecedented growth in recent years. Vietnamese people in the country have more investment options in the real estate market, so the demand for apartments has exceeded the supply, many new projects are sold out right after the sale.
According to Cushman & Wakefield, apartment prices in Ho Chi Minh City have increased surprisingly (90%) in the period 2017-2020, in 2020 alone by 12.8%.
Demand from foreign investors is also one of the driving factors, but much of the growth is still coming from Vietnamese people (in apartment projects, foreigners are only allowed to own 30% of total apartments). Economic progress coupled with a rapidly growing middle class are the main drivers of the expanding housing market, with little indication of a decline in the near future.
Office
Around the world, the office market has been hit hard as employees move to work from home and companies continue to implement flexible work models.
According to Cushman & Wakefield, despite that, Vietnam’s economic growth has driven HCMC’s office rents up 1.7% in 2020, while neighboring cities like Bangkok, Singapore and Hong Kong has all seen a decrease in office rents in 2020.
Resort Hotel
Like the rest of the world, the year 2020 has devastated Vietnam’s resort real estate market, with occupancy hovering around 20-30% for most of the year.
While the recovery is expected to be relatively slow, the outlook remains strong as Vietnam’s tourism industry is on the verge of a pre-pandemic boom. International arrivals increased from 3.8 million in 2009 to more than 18 million in 2019, thanks to economic progress leading to increased business travel, and Vietnam is also becoming a favorite vacation destination for foreigners. out.
The Vietnamese government is encouraging tourism growth by investing heavily in tourism infrastructure.
Vietnam is expected to be a favorable destination for investment in the future. The interest of the group investors helped FDI increase by 75% between 2014 and 2019. KKR & Co. is one of many corporations targeting Vietnam, with the purchase of shares in Vinhomes, Vietnam’s largest real estate developer.
“With the Government setting a GDP growth target of 6.5% by 2021, Vietnam’s real estate market is ready to welcome the economy in the future” – concluded Forbes.
Cre to cafef.vn