Founded in 1995, Savills Vietnam has witnessed the growth of the country’s property market firsthand. There have been lots of peaks and valleys with the COVID-19 pandemic the latest event to impact the real estate sector.
“Stabilizing relations with the United States and officially joining ASEAN in 1995 marked successful milestones. The (country’s) transition from centrally planned to a market driven economy was establishing a robust platform for lasting change and growth,” Neil MacGregor, Managing Director of Savills Vietnam, said. “At the same time GDP growth and increased consumer confidence resulted in rising land prices, as the property market started to show signs of promise.”
Those early signs of life were derailed by the Asian Financial Crisis. MacGregor noted that Vietnam’s limited market opening allowed for a proactive government response which helped successfully manage the crisis and enabled a strong foundation for future growth. This was realized in 2001 when land prices began the increase.
MacGregor, who has spent 20 years in Vietnam, added that the property market became everyone’s favorite investment channel in years preceding to the Global Financial Crisis.
“In mid-2008, effects from the Global Financial Crisis led to a downward cycle in the domestic property market and land prices dropped by up to 40 percent,” MacGregor explained. “Property inventory in 2012 was over VND100 trillion, while property enterprises under bad debt increased. Rapidly rising inflation forced the State Bank to tighten monetary policies. The government, by revising policies and releasing economic stimulus packages to attract investment, helped successfully navigate the crisis.”
This would allow new property segments, such as condotels, to flourish with places like Da Nang and Phu Quoc being able to tap into the country’s booming tourism market. Growth would continue across most real estate sectors until the recent COVID-19 outbreak. However, the outlook remains positive.
“While globalization has positively affected Vietnam, the Covid-19 pandemic has caused extensive damage to global and local economies. Fortunately, early and decisive measures from the government meant Vietnam was far less affected than other countries in the region,” MacGregor stated. “The World Bank anticipates three percent GDP growth in 2020, and its 6.8 percent growth forecast for 2021 shows confidence remains high in the local economy. The Vietnamese economy is primed for the recovery and the real estate sector is set to be one of the key beneficiaries in 2021 and beyond.”