Real estate investors more demanding after market "shock"?

On the morning of December 12, the Vietnam Real Estate Conference - VRES 2023 took place in Hanoi to discuss market trends, impacts from changes in laws, policies and credit in the real estate industry.

Buyers have become more demanding with real estate.

Speaking at the Conference, Mr. Bach Duong - General Director of Batdongsan.com.vn said that VRES 2023 takes place in the context of the real estate market going through a challenging year and this is an opportunity to look back and evaluate as well as propose solutions from all aspects including technology, project development, buyer needs and trends, and policy impacts.

In such a difficult and challenging context, Mr. Bach Duong affirmed that the need for real estate ownership of Vietnamese people still exists.

According to Batdongsan.com.vn's report on real estate consumer psychology and trends (CSS) in the first half of 2024, 65% of respondents plan to buy real estate in the next year. Of which, 60% buy for investment and land is the type that potential buyers are most interested in (33%), followed by private houses (26%) and apartments (24%).

Real Estate - Are real estate investors more demanding after the market 'shock'? — Report on real estate consumer sentiment and trends (CSS) in the first half of 2024.

Reviewing the macroeconomic situation and real estate market in 2023, Mr. Nguyen Quoc Anh - Deputy General Director and Sales Director of Batdongsan.com.vn shared that towards the end of the year, the macroeconomic situation showed a relatively stable state, business activities and bond issuance improved; many new policies were introduced to support the market.

In addition, many key infrastructure projects continue to be accelerated by the Government and urgently implemented, bringing about a lot of positive information in general about market sentiment.

Sharing about the future of the real estate industry, Mr. Nguyen Quoc Anh said that the market is and will depend on certain shifts.

"Buyers and investors are more demanding in terms of the quality and legality of projects. They tend to use more data to make decisions. That is data with many years of history on price fluctuations, investment returns and supply - demand.

As customers become more informed and wiser, investors and real estate businesses also need to rely more on data and market research to offer quality products at reasonable prices," said Mr. Quoc Anh.

Mr. Nguyen Quoc Anh predicts that products serving real housing needs such as apartments and private houses will be prioritized in investors' portfolios because they can create regular cash flow and maintain stable price levels.

He also cited evidence that apartment buildings have had a fast and stable rate of profit growth (price growth rate plus rental yield) over the past decade. According to data from Batdongsan.com.vn, as of the second quarter of 2023, apartment investment profits increased by 97% compared to early 2015.

Policy is gradually becoming a fulcrum for real estate

Besides the story of market trends, at the Conference, experts also said that new points in the Law on Real Estate Business (amended) and the Law on Housing (amended) recently passed by the National Assembly will impact the real estate market, one of the regulations that many market members are interested in is the tightening of land subdivision.

Mr. Dinh Minh Tuan - Director of Batdongsan.com.vn in the Southern region assessed that in the coming time, the land price level will likely be adjusted down, especially for large plots of land.

"However, in the long term, land prices may continue to increase and transactions will return. Because real estate prices depend on other factors such as infrastructure development, economic growth, and people's income. Meanwhile, land is a type that any member of the market can invest in due to the diversity of area, price, and region. In localities with economic growth rates, land in these places will still grow sustainably," Mr. Tuan analyzed.

Real Estate - Are real estate investors more demanding after the market 'shock'? (Figure 2). — Mr. Nguyen Quoc Anh.

Another notable regulation is that real estate project investors are only allowed to collect deposits of no more than 5% of the selling or leasing price from customers when the house or construction project has met all the conditions for being put into operation. Mr. Nguyen Quoc Anh commented that this will help future projects to be of better quality and ensure the rights of home buyers.

However, the regulation also poses challenges for investors in mobilizing cash flow to build projects. He proposed: "The government needs to have measures to support investors, especially in procedures such as applying for licenses or borrowing capital, to both ensure sustainable supply and create a safe environment for buyers."

Sharing about the recovery time of the real estate market, Mr. Nguyen Quoc Anh maintained his opinion that the 2024 period will be the time when the market reverses. However, the reversal time for each type of real estate will be different .

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