Vietnam’s long-ailing real estate market is expected to witness signs of a revival in the fourth quarter of this year.
“From a business perspective, I would say that some improvement is expected,” Ngo Quang Phuc, CEO of Ho Chi Minh City-based developer Phu Dong Group, told a seminar held by The Investor Friday to discuss measures to unleash domestic and foreign investment in the Vietnamese realty market.
“The realty market will certainly show signs of improvement, but how much will depend on prices agreed by sellers and buyers,” he said.
Profit expectations need a balance between reasonable prices from sellers and buyers, and some businesses are now offering flexible pricing options including discounts.
“I'm hopeful that liquidity and cash flow will improve,” Phuc said.
Nguyen Thanh Huong, CEO of Dai Phuc Land, another developer in HCMC, said: “From the perspective of a firm with large-scale urban projects in the city, we believe that current difficulties are only short-term. The possibility of a market revival depends on action, and action will produce results.”
She was referring to the efforts taken by Vietnamese regulators to tackle the market downturn, including the credit crunch.
“We can see that action has been taken. Now, from a business perspective, we need to make more efforts to overcome these difficulties. We hope to see a recovery this year that will continue into the coming years.”
Similarly, the HCMC-based real estate consultancy DKRA expects improvements later this year. “I think the future will be better but not up to previous levels,” said Vo Hong Thang, the firm's deputy director of research and development.
Independent financial expert Huy Nam said the second half of this year would probably see a warm-up.
“Some companies have made serious efforts to revive sales. Prices are falling to a more reasonable level. There is also some bargaining between sellers and buyers, and businesses are starting to accept price cuts,” he explained.
Nguyen Anh Tuan, deputy director of the Foreign Investment Agency under the Ministry of Planning and Investment, said challenges and opportunities are intertwined.
“I think the market will rally in early 2024 as long as macroeconomic conditions continue to improve,” he said. “Foreign investors are still sounding out business opportunities when they see the time is right.”
Can Van Luc, chief economist at BIDV, said he got a forecast three months ago that the market would start to bounce back for four reasons.
“Interest rates, exchange rates, and economic recession are already on the decline, and interest rates in Vietnam have started to go down. Infringements regarding capital mobilization by developers are being handled properly.”
“The third and fourth are major laws that are being amended have taken clearer shape, and investors are still looking for opportunities in the market.”
Addressing the seminar, Dung Duong, executive director of property services firm CBRE Vietnam, said foreign investors still have a strong interest in the Vietnamese realty market, but the interest rates they offer are still too high for domestic firms to accept.
“Their interest rates are in the range of 18-20%. Vietnamese enterprises will definitely not accept these and generally expect 13-15%.
“In other cases, local enterprises are looking for financing from foreign investors but their projects have already been used as collateral for other loans. Another problem is a lack of financial transparency among domestic firms,” she said.
From a regulator’s perspective, Nguyen Manh Khoi, deputy director of the Housing and Real Estate Market Development Department under the Ministry of Construction, said the government is determined to tackle market woes, and has put in place many measures.
The government has issued resolutions to revitalize the market and is speeding up public investment. Among them is Resolution 33, a combination of several solutions designed to remove difficulties and promote the safe, healthy and sustainable development of the real estate market.