The property market is subject to changes at both ends.
The Vietnamese property industry could be about to turn a corner in its development. Last Friday the Ministry of Construction looked back on how 2016 has panned out for this sector and comments were made about which path the industry should be taking next.
There is no doubt that last year has been fruitful across the industry. A total of 15,400 transactions were recorded in Ha Noi and 15,260 for Ho Chi Minh City. Nevertheless, at the event it was emphasised that urban planning needs to be considered in both of these buoyant markets.
It would aid the development of infrastructure with new satellite urban destinations that would be designed to address the issue of ongoing congestion, a constant problem in Vietnam that needs addressing. And with careful planning and foresight, it will be ensure the effective growth of the country without resulting in sprawling urban areas.
The Ministry of Construction will take time this year to inspect new projects that are of a considerable size. The purpose is also to ensure that the right type of housing is built to satisfy demand to prevent any sort of bubble. There is a strong demand for social housing and developers are already changing their strategies to build housing for the lower tier of the market, such as Vingroup’s Vincity – a vital move since urbanisation is increasing annually. Plus this is a change since many developers opted for mid to high end properties in order to generate the biggest profit margins, leaving a deficiency at the lower end of the market.
As developers could face more scrutiny this year, there are also changes happening at the other end of the market. Overseas remittances account for a large chunk of the Vietnamese economy, accounting for approximately 10 percent of the total GDP. However, these overseas remittances are not just being passed to families, rather they are being used to invest in real estate investments and other businesses.
This trend alone will have an influence as more money pours into a sector of the economy that the Vietnamese are confident in. This coupled with potentially a more regulated and transparent system, bodes well for anyone considering to venture into this market.