Week 20/2020 – Central Vietnam Real Estate News Summary
In this weekly or sometimes bi-weekly news flash – CVR: Central Vietnam Realty will provide a choice of articles from mainly Vietnamese media sources related to the real estate market in Vietnam.
We will be focusing on issues related to Da Nang and Hoi An, while also looking at national news and the possible impact for Central Vietnam’s property market.
You will find a summary, link to the source, as well as CVR’s take on the article.
We believe that local knowledge is the key to making the best possible decision and that’s what we offer to all our clients.
“CVR: Western Management – Local Knowledge”
In an article titled “Real-estate segments predicted to increase price after Covid-19”, the author starts by confirming that industrial real estate, apartments for rent and land with pink books are three segments with high expectations of growth and capital appreciation post COVID.
Firstly, we’ve seen industrial zone properties have a strong “immune system”. The land price is 6.5% higher than in the same quarter last year. The demands for properties in the Industrial zone are higher than ever, because Vietnam has solidified itself as a potential destination for companies/investors. Thanks to Vietnam’s location, incentivizing development policies, growth of E-commerce exchange and other economic agreements with other countries we expect to see this trend continuing.
Secondly, with social distancing measurers recently drastically reduced, Vietnam has proved to control Covid-19 very well. Most of the activities are back to their previous daily and working routines. Therefore, many people will need places for living as workers return to the cities, this will help the rental market of apartments, office or commercial recover.
Lastly, according to the author, the demand for accommodation in the market is still very high. Also, land with a pink book is historically a very safe and stable investment. Especially lands in the projects with good infrastructure, so owners have more chances to earn profit and high liquidity.
CVR agrees that the trend of the mentioned real estate segments will grow well after Covid-19. However, with the pandemic situation uncertain in many other countries and travel is limited, businesses experiencing difficulties, etc. Therefore, all real estate segments will still show some signs of the global slowdown in the last half of 2020.
Title of the next article is quite self-explanatory: “Banks lowered interest rates for term under 6-month deposit.”
In this article, author Hong talks about banks applying interest rates for short-term loans from 4-4,25%/year. With terms 6-month or above, deposit rates at many banks are still above 7%/year. The State Bank lowering the ceiling interest rate for short term mobilization cap is appropriate in the context that Vietnam is basically pushing back and strictly controlling the disease.
CVR believes many investors may withdraw their deposit to invest in other fields such as real estate, stocks, ect…. to get higher interest.
Next article we find attention worthy, written by Van Dung, talks about “Real Estates surfing has not proved outdated, investors find other safe channels”
After the epidemic is over, the economy as well as the whole market will need some time to recover. Investment opinion at the present stage is to have a medium and long-term investment strategy, to choose quality products of reputable developers with extensive experience. In particular, investors should invest in markets with many advantages of stable development. Avoiding investing in low-cost, unsafe and unsustainable products.
The author points out that when the market is quiet, strong investors will be thrilled. Short-term investors often have weak capital; high leverage ratios and will soon leave the market. The rest of the long-term investors, with good resources, will choose high quality products and wait until the market flourishes again.
According to CVR experts, the current market in Da Nang is still slow with not many transactions. The weak investors hibernating until the market improves. It is necessary to find another way to invest into real estate in the long run to maximize the income. We believe all of the above points should be taken into account in order to make the right decision on real estate investment.
Ngo Huyen of danang.gov.vn writes in a piece titled: “Da Nang ranked fifth on the provincial competitiveness index (PCI) in 2019”
The article mentions Da Nang’s recent ranking on the Provincial Competitiveness Index (PCI) 2019, being the only city in the Central Coast to make the podium. It is an indicator of the quality of economic management, the convenience and friendliness of the business environment, and the administrative reform efforts of the governments of provinces and cities in Vietnam.
The overall picture of the business environment becomes brighter when 70% – 80% of existing businesses express satisfaction with the behavior of public authorities; More than 50% of domestic and foreign enterprises said that they would continue to expand business in the next 2 years.
In the 15 years of implementing the PCI survey, Da Nang has always been the locality with the leading score in the Central Coast region, and topped the national ranking for 7 years!This is really positive information for any person who has the plan to live and set up their business in Da Nang. This recent ranking will attract a lot of investors who come to Da Nang and will participate in Da Nang’s growth in the future. Residential real estate is always an attractive investment channel with an endless demand.
5. Interesting article by Thuy An, titled: “Post-Covid Resort 19 real estate: Many new bright spots” has been published on a Batdongsan property portal.
As the author points out, resort real estate is a segment heavily influenced by the Covid-19 pandemic. Many measures have been taken to “rescue” this segment while the pandemic was being controlled in Vietnam.
China – one of the world’s Covid-19 epidemics centers – quickly showed the recovery of resort real estate when the epidemic showed signs of stability. Two months after the outbreak, the JLL report showed that 87% of hotels in China were reopened, occupancy rates were around 30%
The head of Savills Hotels Asia Pacific believes that Vietnam may experience a similar stabilization to China. The recovery of the Vietnamese market after the Covid-19 pandemic is expected to follow the V-pattern.
In fact, when the Covid-19 epidemic was under control in Vietnam, the resort real estate initially received coping solutions to restore and boost the market. Expectation on the influx of domestic tourists, most recently, the Ministry of Culture, Sports and Tourism (Vietnam National Administration of Tourism) in coordination with localities launched the Program “Vietnamese people travel to Vietnam”, implemented from 1/6 – 31/12/2020. The program also builds stimulus packages with many attractive incentives to attract domestic customers.
CVR believes these ideas greatly apply to Da Nang, as it is a tourist hub for domestic travelers. Hotels and resorts in the city have already come up with attractive policies to attract business and leisure travelers.
The last piece of news worth mentioning for the week: “Focusing on implementing the project of renovating the western traffic cluster of Tran Thi Ly Bridge”
The building of 3-level overpass project at the western end of the Tran Thi Ly Bridge has a total investment of more than 723 billion Dong, with the implementation time of 15 months. The lowest level will be a 750m-long road tunnel taking Duy Tan Street under the busy junctions with Nui Thanh and extended Bach Dang streets. The upper level on ground will be a roundabout, whilst the highest level will be a 203m-long steel overpass over 2 September Street. In the area behind the Wedding Convention Center, the road will be expanded, the parking lot will be renewed, connected to the intersection of the extended Bach Dang route.
At CVR, we see this is a very important project and initiative for local infrastructure development by Da Nang’s local authorities. The new infrastructure will extend the already bustling riverfront, promote traffic and pedestrian safety, and contribute to economic development especially increasing value to the local real estate market in this area of Hai Chau district, which is undoubtedly also becoming a foundation for hospitality segment development in the future.
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