New opportunities await Mekong Delta property market

The real estate market in Vietnam’s Mekong Delta is looking at new opportunities as huge amounts of infrastructure investment flows into the area, according to experts.

The Mekong Delta region includes Can Tho city and the provinces of An Giang, Dong Thap, Long An, Tien Giang, Vinh Long, Ben Tre, Tra Vinh, Soc Trang, Hau Giang, Bac Lieu, Ca Mau, and Kien Giang

Market lights up

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, said that at the beginning of 2023, amid the general difficulties facing the Vietnamese economy, the real estate market in many regions encountered turbulence. However, the Mekong Delta, or the southwestern region, only saw slight fluctuations.

In the first quarter of 2023, 83 projects were put up for sale in the region, supplying the market with 9,499 new products. New supplies were mainly in Long An and Kien Giang provinces. Villa plots and townhouses accounted for nearly 90% of the total.

The Q1 absorption rate was about 4.3% of total supply, equivalent to 407 transactions.

However, in the second quarter, transactions increased slightly, mainly focusing on products with low construction density and prices of less than VND2 billion ($85,100).

According to Dinh, the reason for the Mekong Delta real estate market’s good liquidity was that land price levels were much lower than in many other regions. For example, in Can Tho - one of the five centrally-managed cities together with Hanoi, Hai Phong, Danang, Ho Chi Minh City, the price of land in the periphery was only about VND20 million ($850) per square meters.

Sharing the same view, Nguyen Van Hung, CEO of Broland Property, said that products in the Mekong Delta actually met real needs. Local investors prefer to invest in plots to accumulate more assets and settle down (accounting for over 60%). However, due to long-term investment goals, they consider carefully before putting down their money. Therefore, the property market in the region is relatively stable with very few “fevers”, and is less affected by the herd mentality.

"Investors in the southwestern region often use equity capital with a high proportion of 50-70%, even 100%, for their investments. They rarely use financial leverages, so there are few selloffs and loss-cutting transactions when the market plunges," said Hung.

New opportunities

Dinh forecast that the Mekong Delta's real estate market will be vibrant in the future as the region boasts a gross regional domestic product (GRDP) higher than the national average and is increasingly improving transport infrastructure. In the next four years, the region will have an additional 554 kilometers of expressways and four large-scale bridges.

This region is also deploying a series of large industrial parks such as VSIP Can Tho and Gilimex Vinh Long, he added.

According to the expert, the regional property market has seen the presence of "sharks", but the investment scale was still small, mainly focusing on land plots or ready-built townhouses.

“Therefore, investment in essential infrastructure will help create jobs to retain workers and limit migration, thereby increasing demand for housing and helping the real estate market develop more sustainably,” he noted.

Hung said that in the past, regional localities faced huge difficulties in trade connections because of poor transport infrastructure, hindering investors from landing investments.

Now many key traffic projects have been put into operation, opening new development spaces for properties, especially those along new roads, he said, adding real estate in industrial parks and for logistics purposes will be expanded, not only generating more jobs but also increasing the value of land use.

"Real estate will not be concentrated in a few key localities but expanded along new roads, industrial parks and clusters. This is an opportunity for investors,” he noted.

In the past, local investors held the majority of properties in the region, but now with convenient traffic connections, the region will attract more and more investors from Ho Chi Minh City, Hanoi and other localities, he added.

According to Hung, the Mekong Delta real estate market has focused mainly on land plots and ready-built townhouses. It still lacks products such as apartments, industrial property, and eco-resort real estate, which will have high demand in the near future.

Ministry of Construction data shows in 2022, the region’s urban population was about 17.5 million and its average urbanization rate reached 31.8%, about 10% lower than the national average.