Da Nang and Central Vietnam Real Estate Market 2020 Summary and Outlook for 2021

Introduction

2020 has been a challenging year which will likely remain in our memories as the year of the Covid-19 global pandemic.

As we have pointed out in an article from April this year on LuxuryPropertyDanang.com on the immediate effects of the pandemic and its negative impact on the real estate market of Central Vietnam including Da Nang and Hoi An – while the transaction volumes in most segments went significantly down, the recovery can be relatively quick and will largely depend on how well Vietnam as well as the world in general deals with curbing the spread of the virus.

At the time of writing of this article, first vaccines are being rolled out globally and the general outlook is more and more positive. Vietnam has also excelled in containing the spread of the virus with very low numbers of local transmissions – which should positively contribute to growth of most, if not all segments of the economy – including real estate. Coupled with expected 15-20% increase in the real estate investment volumes in the SE Asia region in general, we expect a swift recovery and return to the path of strong growth in 2021 and beyond.

 

Economy of Vietnam = Resilience

If we were to use one word to describe economical performance of Vietnam amidst the global pandemic, the world we would use is RESILIENCE.

While the global economy is forecasted to shrink by over 4% in 2020 according to IMF experts, Vietnam has shown remarkable resilience and is one of the countries least affected by global slowdown.

Forecasts for 2020 we have mentioned in April were largely correct (+2.7% GDP). As reported in recent days by General Statistics Office of Vietnam, the country’s economy expanded by total of 2.91% in the year 2020.

It is important to note the dynamic of change throughout the year with expansion by 3.68% in the first quarter when the pandemic was starting, through 0.39% in the second quarter after Vietnam closed its borders, and 2.69% in the third quarter showing effects of global slowdown yet direction of recovering, followed by positive 4.48% in the fourth quarter as a result of one of the best responses to fighting the virus globally and keeping the economy open (despite closed borders).

A significant event expected to give Vietnam’s economy a further boost in the coming years was the EU-Vietnam free trade agreement (EVFTA), which came into effect on August 1, 2020, paving the way for increased trade between the EU and Vietnam, eliminating almost 99 percent of customs duties.

Overall, the outlook for Vietnam’s economy in 2021 is bright as further illustrated by recent announcement by the prime minister Nguyen Xuan Phuc increasing the official target of growth in the country’s GDP from 6% to 6.5%.

 

Da Nang and Central Vietnam Real Estate market in 2020 – on the road to recovery

While the real estate market of Vietnam in general has been negatively affected by the global situation, with major slowdown in number of transactions and a plunge in occupancy rates as well as rents due to  businesses struggling to survive the Covid-19 pandemic, it is already showing signs of recovery.

According to some of the recent reports, prices in certain segments of the real estate market have actually increased throughout 2020, which is mainly attributed to a relatively low supply of new projects.

Real Estate market of Central Vietnam, and in particular Da Nang is in a similar situation. We have witnessed temporary “freeze” of the market in first half of the year, followed by cautious recovery in the last 6 months.
We have seen discounts offered by both developers and private sellers as well as rental prices coming down by double digits.

The above is true for the volume of both local and foreign investors – perhaps even more so the latter, given closed borders and difficulties entering Vietnam from abroad.

While there have been individual opportunities in form of distressed assets offered for sale with strong discounts compared to 2019, in general prices have remained stable and we expect them to start climbing up again in 2021, especially second half of the year, as the travel limitations are (hopefully) being relaxed due to introduction of the vaccine and the world starts going back to “normal”.

Da Nang and Central Vietnam Real Estate Market Outlook for 2021

As 2020 is coming to an end, given strong fundamentals for further growth of Da Nang – Hoi An region of Central Vietnam, we continue to foresee real estate market recovery in 2021. We expect more focus from developers and investors on affordable residential segment, such as Monarchy Danang and Son Tra Ocean View (both offering limited resale units available for foreign buyers) as well as industrial and commercial property segments, in particular serving the growing needs of modern day logistics and e-commerce providers.

We also believe in potential for growth in holiday villa projects offering larger, resort style homes, further away from the city center – such as Fusion Villas Danang and X2 Hoi An for those valuing less crowded lifestyle.

LuxuryPropertyDanang and CVR team is ready to serve clients in Central Vietnam with all real estate related enquiries in these unprecedented times and look forward to employing cutting edge, tailor made technologies to facilitate safe and efficient communication with all our clients.

Peter Frieske
Managing Director
LuxuryPropertyDanang.com
CVR – Central Vietnam Realty
Da Nang, Vietnam