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Week 28/2022 – 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 their possible impact on Central Vietnam’s property market.
You will find a summary, a 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”
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1. Five real estate market forecasts at the end of the year.
In the first half of 2022, although the real estate market did not recover in the “V” shape as expected, it still recorded positive movements.
Risk warning:
Forecasting some possible risks for the market in the second half of 2022 and early 2023, such as:
Firstly, the move to tighten bond issuance and real estate credit will likely continue to be maintained.
Second, the cost of construction materials is forecast to continue to escalate.
Third, some political turmoil in the world affects the global economy.
Fourth, the risk of inflation is high in the world and unpredictable in Vietnam.
Fifth, the primary selling price continuously increased, beyond the ability of a large number of buyers with real housing needs.
According to some statistics, real estate prices in certain segments and areas are currently 20-25 times higher than people’s income and this number is likely to continue to increase in the near future.
From a business perspective, investors are likely to face many difficulties related to arranging capital and mobilizing resources to develop projects.
Thereby, affecting the implementation progress, missing certain market opportunities, or forcing them to approach other mobilization channels in the capital market with higher costs, the risk of “eroding” corporate profits.
Source: https://cafef.vn/5-du-bao-thi-truong-bat-dong-san-cuoi-nam-20220711063723408.chn
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2. Rush to buy at peak but no one buys at the bottom
In the past few years, the real estate market has continuously experienced a land fever. The peak of the land rush is 2021 when all markets break different records in price. Land fever is not only happening in big cities like Hanoi or Ho Chi Minh City but also in rural areas, even mountainous areas.
Although the land price is continuously increasing, the number of land people is increasing and the number of new investors entering the market is also increasing, making the market even hotter.
However, up to now, the real estate market has “cooled down” even some investors have started to cut losses to exit but still have no liquidity. This situation is in stark contrast when prices are rising.
Warren Buffett’s legendary investor has an investment philosophy: ‘ Be fearful when others are greedy and greedy when others are fearful, but it’s all the other way around because most people don’t want to get rich slow.
Meanwhile, many investors are taking advantage to restructure assets. If the seller drops to 10-15% compared to the market, they should buy immediately. This opportunity is for investors with strong potential and long-term investment
3. 3 factors that form the heat of land “fever” and how to measure it
Meanwhile, the land fevers in the past 5 years (2016-2018; 2020-2022) all share at least one of three factors: Planning, Investment, and Policy.
With factor rule: Van Don land fever can be mentioned before the information on the special economic zone. Batdongsan.com.vn cites google trend data showing that land fever formed when there was information about the planning of the Van Don Economic Zone in early 2018 and then peaked around July 2018 before the news of 3 investors. Exporting high-end projects on tourism and resort infrastructure.
With the capital investment factor: a typical “case” is the land fever in Chau Duc (Ba Ria – Vung Tau) before the news that VinGroup proposed planning 3 big projects.
With the element of policy: The latest land fever related to interest rate policy. Cheap money in the market has stimulated investors to buy land plots, causing a large-scale land fever that lasted from the beginning of 2020 and peaked at the beginning of the second quarter of 2021.
Signs to recognize the level of soil fever: Investors can identify the “hot” level of a land fever through 4 signs: Planning information, infrastructure policy; Amount of registered/disbursed FDI capital; Google Trend and Price Index, and interest level.
Why it is important: Recognizing the signs and levels of land fever helps buyers and investors choose the right time to enter the market.
Source:https://batdongsan.com.vn/tin-thi-truong/3-yeu-to-hinh-thanh-va-cach-do-do-nong-cua-sot-dat-ar109359
4. 4 big difficulties of the Real Estate market and Solutions
The big 4 difficulties include:
- 1. Lack of master plan
The master plan approval process should be more streamlined than the current one. In 2020, Prime Minister Nguyen Xuan Phuc approved “the task of making the national master plan for the period of 2021 – 2030, with a vision to 2050”. However, the progress of planning for the period 2021-2030 is very slow when only 7/111 plans have been decided and approved by the end of May.
Specifically, the 1/10,000 plan is being approved by the Ministry of Construction while the approval of the 1/2000 and 1/500 planning is under the authority of the provincial People’s Committee. With an area of over 30 hectares or a scale of over 50,000 people, the right to re-approval belongs to the Ministry of Construction. The lack of clarity on planning management affects the progress of projects.
—> Solution: The Approval and related work should be less complex from the Central to the Region, faster checking and approving the Proposal.
- 2. Many laws overlap
Specifically, the Land Law and the Construction Law are still overlapping, causing difficulties in the approval process for domestic and foreign investors. The Law on Planning was passed in 2017, but the implementation process encountered many challenges and obstacles due to the inadequacy of the Law and unclear regulations.
—> Solution: The laws need to be arranged, and organized reasonably and effectively to avoid the overlap between different provisions of the legal framework. From there, support local authorities in the process of project approval and improve the shortage of land funds for housing development.
- 3. Shortage of land funds in big cities, leading to the risk of bubbles
An outstanding problem is that speculation occurs in many localities, and housing market prices are not oriented toward end buyers. This will cause the society and economy to develop unhealthy in the long-term, the land fund in big cities like Ho Chi Minh City and Hanoi for project development is still small, and easily manipulated, leading to a real estate bubble.
—> The long run-over view required and the land fund should be arranged well in order to meet the route of development.
- 4. Real estate credit tightening
Currently, real estate credit and corporate bond issuance are under strict control. The State is also considering limiting short-term foreign loans to finance medium and long-term projects (draft).
—> Solution, businesses should actively diversify their capital sources, approaching alternative channels such as investment funds, M&A, and joint ventures. Diversifying capital sources will help stabilize the market and reduce systemic risks.
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5. Tax study on the use of the real estate
Speaking at the conference, the Prime Minister emphasized that real estate and the real estate market play an important role in the economy, directly and widely affecting people, businesses, growth, and development. economy; Current cash flow and credit of the economy are related to real estate. In the past time, the development of the real estate market has had many shortcomings and violations that have to be handled.
The Prime Minister also emphasized the point of persistence, steadfastness, and determination to develop a safe, healthy, and sustainable real estate ecosystem; not tighten credit unreasonably, but strengthen inspection and supervision, not relax state management; do not criminalize economic – civil relations but review, prevent and detect violations to strictly handle in accordance with regulations.
The Ministry of Natural Resources and Environment is responsible for coordinating with the Ministry of Finance and the Ministry of Justice to study, review and amend current law provisions related to the auction of land use rights (law on auctions). price, land law, tax administration law) ensure consistency and suitability with the actual situation in the locality.
In addition, this Ministry is assigned to inspect, examine and direct, guide, and coordinate with localities to detect, prevent and strictly handle violations in land use right auction activities. Ensure legal compliance…
Source:https://vietnambiz.vn/nghien-cuu-danh-thue-doi-voi-viec-su-dung-bat-dong-san-202271574127867.htm
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