Amidst the vibrant landscape of Hanoi, the realm of real estate unfolds with dynamic shifts and promising avenues. For potential investors, comprehending the intricacies of this market is not merely a choice; it's a strategic imperative. As we delve into the current state of Hanoi's real estate, we unravel trends, explore growth potential, and navigate through diverse property investment options like residential real estate, commercial real estate, and land investment. Join us on this illuminating journey where market insights metamorphose into informed decisions, guiding you through the evolving world of real estate in Hanoi.

Overview of the Real Estate Market in Hanoi

Current Market Trends

As of the third quarter of 2023, the nationwide real estate market maintains a subdued state, yet Hanoi stands out with relatively stable transaction rates and selling prices. Despite the absence of sudden growth, this stability signals optimism amid market challenges. Ministry of Construction statistics for the same period reveal 863 housing projects underway nationwide, with Hanoi hosting 48 projects, surpassing Ho Chi Minh City in higher-ranked projects. The primary market witnessed a notable 7% increase in apartment selling prices compared to the second quarter and a substantial 14% rise from the same period in 2022. In the secondary market, average sales prices reach approximately 32 million VND/m2, reflecting a 2.7% quarterly and 0.8% yearly increase. Looking ahead to 2024, the apartment market in Hanoi is anticipated to strengthen, with an estimated new primary supply of nearly 16,000 units. Foreign direct investment (FDI) in real estate is poised to increase, with a forecasted influx of projects from foreign investors. Despite the potential for rental exploitation, estimated at only 1% - 2% of the total investment value per year, the market remains buoyant. Real estate prices in suburban areas, including Dan Phuong, Dong Anh, and Hoai Duc, have witnessed a substantial 12-15% increase compared to the 2018-2019 period. The eastern region, particularly Gia Lam, is emerging as an improved housing market thanks to ongoing infrastructure projects. The fourth quarter of 2023 is expected to see new project-driven supply, and by 2025, Dong Anh is anticipated to lead with a 23% market share of future supply.

Potential Areas for Growth in the Next 3-5 Years

West: After the merger of Ha Tay into the capital, the Western real estate structure experienced a significant rise. Key traffic infrastructure developments such as Nguyen Trai road, Thang Long avenue, and Le Van Luong street catalyzed a boom in the Western Capital's real estate market. However, the potential for this area remains relatively limited, with noticeable vacancies along Highway 32. The West holds promise as satellite towns like Hoa Lac, Son Tay, and Xuan Mai are planned, with potential benefits from university relocations and the proposed Metro line 5 to Hoa Lac.

East: As part of the Northern key economic triangle of Hanoi - Hai Phong - Quang Ninh, the East is poised for urban expansion. While suburban areas in the East currently offer lower apartment prices, the region holds potential for investors over the next 5-10 years. However, the Eastern region, including Gia Lam and Dong Anh, faces challenges such as extended travel time to the inner city. According to Savills' report, the East has witnessed robust growth in the low-rise segment supply, increasing from 8% in 2014 to 15% in the first half of 2023. The East, including Gia Lam and Hung Yen, is perceived as a future hotspot, boasting a large land fund, diverse real estate supply, and substantial infrastructure development.

North: The Northern region, encompassing Dong Anh and Me Linh, is expected to be one of the most potential areas in the Hanoi real estate market. The North benefits from key infrastructure projects such as Ring Road 2 and Ring Road 3, Nhat Tan bridge, Thang Long bridge, and upcoming Tu Lien bridge. Additionally, planning for Metro line 6 and Metro line 2 contributes to the North's growth potential. Soc Son is anticipated to become one of Hanoi's five satellite urban areas.

South: The South, including Hoang Mai and Thanh Tri, holds advantages as a traffic gateway and benefits from the planned belt road system. However, predictions for the area's real estate market are comparatively modest. Despite being the least favored, the South is strategically important for Hanoi's urban planning, with expansion approved to 2050.

In this landscape, the East, with projects like Ecopark and Vinhomes Ocean Park, emerges as a rising star. The area's large land fund, integrated urban areas, and natural incentives position it as a potential new center for Hanoi, attracting both residents and investors. As Vietnam's supply chains grow, and jobs shift from the old city, the Eastern region is poised for significant real estate development and price appreciation over the next 5 years.

Real Estate Investment Options in Hanoi

Land Investment

The land investment landscape in Hanoi reflects stability in transaction activities, with selling prices holding steady or experiencing slight increases, particularly in areas with ongoing investments in transport and technical-social infrastructure. For instance, land in Nguyen Khe, Hai Boi, and Co Loa communes (Dong Anh district) ranges from 18 to 40 million VND/m2, displaying consistent pricing from the beginning of 2023 to the present. Conversely, areas like Kim Chung, Di Trach, and An Khanh (Hoai Duc district), undergoing infrastructure expansion with the construction of Ring Road 3.5, have witnessed a modest price uptick of 5 to 7%, reaching 65 to 75 million VND/m2.

Residential Properties: Apartments and Houses

Recent developments in the Hanoi real estate market reveal a substantial number of mid-high-end products in newly opened projects. A notable shift, especially in the third quarter of 2023, is the emergence of affordable housing segments priced between 25 - 35 million VND/m2. Despite challenges in the mid-high-end segment due to high prices and lower transaction volumes, the affordable segment has gained attention. The apartment segment, in particular, remains resilient, serving genuine housing needs. Market research indicates a 1% increase in demand for purchases and a significant 6% rise in rental demand compared to the second quarter. Apartments priced from 2 - 4 billion VND are particularly sought after, showing signs of robust absorption, especially in the central core area of the Capital.

Commercial Real Estate

Hanoi continues to lead the country in attracting foreign investment (FDI), securing nearly 2.53 billion USD in new grants and capital increases during the first nine months of 2023. The retail sector is witnessing notable expansions from prominent brands like Muji, Starbucks, and Central Retail, drawing attention from various fashion and cosmetics brands from China, Korea, and Japan. This surge in activity is anticipated to contribute to a more vibrant market in the first half of 2024, reflecting the capital's resilience and attractiveness to international investors and retail giants alike.

Pros and Cons Analysis of Each Option

Land Investment

Advantages:

• Potential for Appreciation: Land investment in Hanoi offers the potential for substantial appreciation, especially in areas with ongoing infrastructure development and urban expansion.
• Diverse Usage: Land can be used for various purposes, providing flexibility for investors to develop residential, commercial, or mixed-use projects based on market demands.

Disadvantages:

• Lack of Immediate Income: Unlike rental properties, land typically doesn't generate immediate income, and returns depend on the timing of development and market conditions.
• Regulatory Risks: Land investments are subject to regulatory changes, and investors must navigate zoning laws and development regulations, adding a layer of complexity.

Residential Properties: Apartments and Houses

Apartments’ advantages:

• Steady Rental Income: Apartments offer a consistent stream of rental income, making them attractive for investors seeking regular returns.
• Lower Maintenance: Compared to houses, apartments often require lower maintenance, with building management handling common areas and exterior upkeep.

Apartments’ disadvantages:

• Limited Outdoor Space: Apartments may lack private outdoor spaces, limiting their appeal to tenants who prioritize this feature.
• Market Saturation: In certain areas, the market for apartments can be saturated, leading to increased competition and potential challenges in rental pricing.

Houses’ advantages:

• Larger Living Spaces: Houses provide more significant living spaces and often include private yards, appealing to families and individuals seeking more space.
• Potential for Value Appreciation: Similar to land, houses can appreciate in value over time, offering potential returns upon resale.

Houses’ disadvantages:

• Higher Maintenance: Houses typically require more maintenance, and property owners are responsible for the upkeep of both the interior and exterior.
• Longer Vacancy Periods: Houses may experience longer vacancy periods between tenants, impacting the overall rental yield.

Commercial Real Estate

Advantages:

• Higher Rental Yields: Commercial properties generally offer higher rental yields compared to residential properties, providing attractive returns for investors.
• Diverse Investment Options: Commercial real estate includes a variety of options such as retail, office spaces, and industrial properties, allowing investors to diversify their portfolios.

Disadvantages:

• Economic Sensitivity: Commercial real estate is often sensitive to economic fluctuations, and economic downturns can impact occupancy rates and rental incomes.
• Higher Entry Costs: The initial investment required for commercial properties is typically higher than residential properties, posing a barrier to entry for some investors.

Final Thoughts

In dissecting Hanoi's ever-evolving real estate dynamics, gaining insights into market trends, growth prospects, and diverse investment options is essential. Astute decision-making is the linchpin for flourishing real estate ventures. As you navigate the landscape, trust Viettonkin as your seasoned partner, offering specialized expertise and tailor-made solutions to optimize your property investments. Ensure your success in Hanoi's competitive real estate market with Viettonkin.

During the first 7 months of the year, investor groups from Singapore, South Korea, Taiwan, Japan, and Malaysia have actively explored real estate projects for buying, selling, and merging (M&A), with a total value reaching approximately 1.4 billion USD.

Foreign Investors Operating Vibrantly

Recently, Surbana Jurong Group from Singapore signed a cooperation agreement with Kim Oanh Group to develop projects where Kim Oanh is the main investor. According to the agreement, Kim Oanh Group and Surbana Jurong will collaborate to develop a series of real estate projects including residential properties, resorts, and office buildings in the southern region. Additionally, Surbana Jurong will be responsible for urban planning consultancy and architectural advice for the projects undertaken by Kim Oanh Group.

Ms. Dang Thi Kim Oanh, Chairwoman of Kim Oanh Group's Board of Directors, stated that the company is focusing on developing a line of reasonably priced, easily accessible social housing products that ensure good and sustainable quality, providing a green, clean, and safe living environment. The strategic cooperation agreement with Surbana Jurong enables the Group to develop Singapore-standard social housing in Vietnam.

Similarly, Hung Thinh Group has also joined hands with Marubeni - the largest diversified trading and investment conglomerate in Japan. The two parties are collaborating to invest in the development of a project located in the new administrative center of Thu Duc City, with a total expected investment of over 10,000 billion VND. Mr. Masato Tachibana, a representative of Marubeni, mentioned that both parties will carefully evaluate the actual situation to implement efficient and rapid deployment steps.

ESR Group Limited Invests $450 Million to Increase Ownership in BW Industrial Development Joint Stock Company

In the context of a challenging market, foreign capital is expected to become a 'safety exit' that helps real estate businesses recover. Survey results indicate that the number of foreign investors interested in projects in Vietnam is increasing significantly. However, in the first few months of this year, M&A transactions in the real estate sector have not progressed rapidly.

Ms. Dao Thien Huong, Deputy General Director of EY Vietnam, stated that in the first 7 months of 2023, the M&A market value in Vietnam reached nearly 3.2 billion USD, a decrease of 62% compared to the same period last year. Among them, M&A in the real estate and construction sector reached 1.4 billion USD with 24 transactions, a decrease of 65% compared to the same period in 2022.

In terms of segments, industrial real estate is the most attractive segment for M&A deals (16 successful transactions). Currently, foreign investors make up about 92% of the buyers in real estate M&A deals in Vietnam, with the majority coming from Taiwan, Singapore, and South Korea.

Notable among these is the ESR Group Limited transaction – one of the largest asset management companies in Asia-Pacific. They invested 450 million USD to increase their ownership in BW Industrial Development Joint Stock Company in January 2023. This is the largest deal in the real estate market and stands as a prominent example in the industrial real estate segment.

Regarding the residential and urban area segment, Gamuda's acquisition of a 3.68-hectare project in Thu Duc City for 305 million USD in early July leads the segment. In addition, there are other notable deals, such as Keppel Corporation repurchasing an 11.8-hectare project from Khang Dien for 277 million USD and a retail project in the center of Hanoi for approximately 80 million USD.

Recognizing the Challenges

According to Ms. Dao Thien Huong, there are still many ongoing real estate M&A negotiations, but there are significant challenges that persist.

"There are four important factors in the transaction structure, including price expectations, legality, transparency, and financial structure. The current difficulty lies in the legal framework for foreign investors to own real estate in Vietnam, which is still not fully refined," said Ms. Huong.

Regarding this issue, lawyer Ngo Thi Van Quynh, Director of An Legal Law Firm, assessed that complex legal procedures are the main reason for the slower progress of M&A transactions.

To meet investment requirements, it's often necessary to take a roundabout route through 3 to 4 intermediaries, making it very complex to control investment cash flow. To address these challenges, the parties involved spend a lot of time and costs. Some projects even take several years to supplement M&A documentation, and the outcome can't be predicted as decisions and opinions need to be awaited from relevant authorities and departments," lawyer Van Quynh said.

Currently, the government has taken many positive steps to improve the legal framework in the Draft Law on Real Estate Business (amendment), which includes provisions to facilitate foreign investors in project development. It is hoped that starting from 2024, real estate project M&A will become more vibrant.

Apart from legal matters, buyers are prioritizing projects with prime locations and development potential, but they are requesting price discounts of 10-20%. Meanwhile, some sellers are hesitant to reduce prices. It should also be mentioned that there are still some enterprises and projects lacking financial transparency, without independent audit units, which can hinder investors in making M&A decisions.

Therefore, foreign investors often choose to collaborate through joint ventures or capital contribution to jointly develop projects with domestic enterprises. This approach leverages the strengths of both sides, where local developers understand the market, legal aspects, and conduct necessary procedures, while foreign investors bring capital strength and project development experience.

In the dynamic realm of Vietnamese real estate, the term "condotel" stands out as a compelling fusion of condominium and hotel, offering unique investment opportunities and challenges. This article delves into the intricacies of the condotel market in Vietnam, shedding light on its definition and its profound impact on the country's real estate landscape. Explore the diverse condotel in Vietnam scene as we navigate through key aspects of ownership, revealing insights into property management, and providing a comprehensive step-by-step guide for those interested in venturing into this thriving market.

Understanding the Condotel Market in Vietnam

Overview of Condotels in Vietnam

The term "condotel" refers to a unique hybrid property type combining features of condominiums and hotels, presenting an innovative investment avenue in the Vietnamese real estate sector. Typically, condotels allow individual ownership of units within a larger development managed as a hotel. According to the Vietnam Real Estate Association, the country boasts approximately 239 tourism property projects, encompassing a staggering 114,000 condotels with an estimated value of around 297 trillion VND. These projects are strategically concentrated in areas with robust tourism markets, including Ho Chi Minh, Hanoi, Da Nang cities, and provinces such as Binh Dinh, Khanh Hoa, Binh Thuan, and Ba Ria-Vung Tau.

Benefits and Risks of Condotel Ownership

Investing in a condotel provides distinct advantages, including the potential for consistent rental income, professional property management, and the possibility of property appreciation. The Vietnam Real Estate Association underscores that condotel supply represents a significant 80% of the overall second home supply in key coastal destinations, underscoring their substantial market presence as of 2019. Motivated by the pursuit of quicker returns on investment and a growing confidence in hospitality ventures, developers have propelled the popularity of condotels. While traditionally seen as a "lifestyle product," buyers are increasingly recognizing them as lucrative investment prospects, particularly given the intense competition in this sector. Nevertheless, investors should be mindful of risks such as market fluctuations, varying occupancy rates, and potential shifts in management policies. A thorough understanding of these intricacies is essential for making well-informed investment decisions in the dynamic realm of real estate.

Step-by-Step Guide to Buying a Condotel in Vietnam

Legal Considerations

Investing in a condotel involves navigating specific legal considerations, and recent regulatory developments have brought positive changes to the landscape. The issuance of the government’s Decree 10/2023 marks a significant milestone for the resort real estate market, providing a transparent legal framework for condotels. Under this decree, condotels, officetels, resort villas, and other tourism-related buildings on commercial and service land meeting legal requirements will be granted land-use right certificates. The certificates, valid for 50 years (or up to 70 years for specific projects), bring clarity to ownership and legal status. This crucial step enhances transparency, creating a more secure environment for both developers and buyers. As the market eagerly awaits these certificates, projected to impact approximately 83,000 condotel apartments nationwide, as per data from the Ho Chi Minh City Real Estate Association, it is imperative for potential investors to grasp the evolving legal landscape, seeking counsel from legal professionals well-versed in real estate transactions. Additionally, understanding foreign ownership regulations is critical for prospective buyers, with specific provisions governing leasehold duration, ownership limits, and the acquisition process.

Financial Planning and Investment

Diligent financial planning stands as a fundamental aspect of the condotel acquisition journey. Potential buyers must meticulously evaluate their budget, delving into the array of financing options available for condotel acquisitions. While condotel and second-home products might not promise exceedingly high returns, a thorough financial analysis remains crucial. Anticipated operating yields fluctuate depending on factors such as unit price, size, and prevailing market conditions. Smaller, more budget-friendly units could yield returns of up to 8% of the purchase price, whereas larger, more luxurious units might see yields between 4% and 5%. Operating costs, spanning from 45% to 65% of gross revenues, underscore the need for a comprehensive financial strategy. Seeking guidance from financial consultants and real estate experts offers valuable perspectives, assisting buyers in making well-informed decisions aligned with their financial objectives.

Choosing the Right Condotel

Choosing the appropriate condotel property is a significant decision in the buying process. Buyers need to weigh various factors, such as location, developer reputation, amenities, and the property's potential for appreciation. Conducting due diligence on the developer's track record and the details of the condotel project is essential. Evaluating the property's suitability for investment goals and intended use is important. Real estate agents play a valuable role, providing assistance, insights, and organizing on-site visits to contribute to the decision-making process. Thoughtful consideration of these factors guarantees a successful and rewarding condotel investment experience.

Ensuring Successful Condotel Ownership

Ongoing Property Management

Effective property management is integral to the success of condotel ownership. Owners must recognize the importance of maintaining their property to ensure long-term value and guest satisfaction. Professional property management services play an indispensable role in handling day-to-day operations, maintenance, and guest interactions. By entrusting these responsibilities to experts, condotel owners can focus on the overall success of their investment.

Maximizing Rental Potential

To optimize rental income, condotel owners should employ strategic approaches. This involves implementing effective marketing tactics to attract a steady stream of guests. Pricing strategies tailored to market demand and collaboration with rental management services can significantly enhance rental yields. By adopting a proactive approach, owners can tap into the full income potential of their condotel investments.

Staying Informed on Market Trends

Staying informed on market trends and regulatory changes is key to making informed decisions. Owners need to remain vigilant about shifts in the real estate market, tourism industry, and relevant regulations. This knowledge equips them to proactively adapt their strategies, capitalize on emerging opportunities, and mitigate potential risks. Being well-informed positions condotel owners for sustained success in a dynamic market landscape.

Final Thoughts

In wrapping up our exploration of the condotel landscape, it's clear that this investment avenue is brimming with potential in Vietnam's thriving real estate sector. Highlighting the allure of growth and diverse opportunities, condotels seamlessly blend leisure with financial gains. Looking ahead, recognizing the essential role of professional consulting services becomes crucial. Viettonkin, a standout in Vietnam's real estate, stands ready as your reliable partner, poised to enrich every facet of your condotel investments. From legal considerations to optimizing returns, Viettonkin ensures a comprehensive approach. Uncover the expansive possibilities with Viettonkin, unlocking the full potential of condotel ownership.

In the bustling landscape of Vietnamese real estate, a shop house stands as a distinctive and versatile asset. Defined by its unique combination of commercial and residential spaces, a shop house is a prominent feature in the country's property market. Beyond its structural appeal, owning a shop house in Vietnam comes with a myriad of advantages, ranging from its strategic locations conducive to business visibility to its potential for generating additional income streams. As we delve into the core of shop house ownership, this article will explore its dual-purpose versatility, strategic advantages, and long-term investment potential. Join us in unraveling the effective ways to operate a shop house and navigating the legal complexities of acquiring one in Vietnam.

Advantages of Owning a Shop House in Vietnam

Versatility and Dual Purpose

In the vibrant landscape of Vietnamese real estate, the hallmark feature of a shop house lies in its inherent versatility. This architectural gem seamlessly combines both commercial and residential spaces, providing owners with a dual-purpose asset. The flexibility to conduct business operations on the lower levels while enjoying residential amenities above offers a unique proposition. This adaptability not only caters to entrepreneurial ventures but also opens avenues for creating additional income streams. Whether used for retail, services, or hospitality, the multifaceted nature of a shop house in Vietnam ensures that owners can diversify their revenue streams, contributing to the property's overall economic value.

Strategic Location and Visibility

A key advantage of owning a shop house is the strategic significance of its location. Success in commercial endeavors often hinges on accessibility and visibility, areas where shop houses excel. Situated in high-traffic zones, the location of a shop house becomes a potent factor for business success. The inherent visibility of these structures amplifies brand exposure, providing businesses a competitive advantage. Entrepreneurs looking for a thriving setting for their ventures discover that shop houses offer not just a physical space but also a strategic foothold in prime locations, maximizing their potential in Vietnam's dynamic commercial real estate sector.

Investment Potential

Beyond immediate utility, owning a shop house in Vietnam unfolds as a savvy long-term investment. The country's robust economic growth and increasing urbanization contribute to a rising demand for well-located commercial spaces. As a result, property appreciation becomes a key driver of value for shop house ownership. The investment potential extends beyond immediate returns, with trends indicating sustained growth in demand for these versatile properties. Exploring this facet involves understanding market dynamics, anticipating future trends, and positioning shop houses as valuable assets in an evolving real estate landscape. In essence, investing in a shop house aligns with the trajectory of Vietnam's flourishing real estate market, presenting an opportunity for both stability and growth.

Effective Ways of Running a Shop House in Vietnam

Business Planning and Strategy

Running a successful shop house demands a comprehensive and well-structured business plan. This foundational document outlines operational strategies, financial projections, and marketing approaches tailored to the unique dynamics of shop house operations. An effective plan should encompass a clear understanding of target audiences, pricing models, and competitive positioning. For different commercial real estate types housed within a shop house, such as retail, food services, or offices, the business plan should adapt to specific industry requirements. Maximizing space utilization is a critical aspect, and strategic planning ensures that each square meter contributes to the business's overall functionality and success.

Marketing and Customer Engagement

In Vietnam's competitive business environment, successful shop house owners prioritize effective marketing strategies. Utilizing the physical presence of the shop house is key, employing attractive storefront designs, window displays, and signage to enhance visibility and attract foot traffic. To reach a broader audience, incorporating digital marketing, social media, and online platforms is essential. Transforming the shop house into a hub for community engagement through events and collaborations fosters customer loyalty. Creating a welcoming atmosphere contributes to a positive brand image, enhancing the overall success of the shop house.

Legal and Regulatory Compliance

For shop house owners in Vietnam, understanding and navigating the legal landscape are fundamental. Awareness of legal considerations for shop house ownership is critical for compliance and smooth operations. This includes understanding zoning regulations, building codes, and obtaining the necessary permits for different business activities. Managing the property requires compliance with local laws, understanding tenancy regulations, and ensuring the safety and accessibility of the shop house. Proactive attention to legal compliance not only mitigates risks but also establishes a foundation for sustainable business operations within Vietnam's regulatory framework.

Legal Regulations on Shop House Ownership in Vietnam

Investing in a shop house in Vietnam requires a comprehensive understanding of the legal framework associated with property ownership. Here's a breakdown of crucial aspects to consider:

The process of purchasing a shop house in Vietnam involves several key steps. Initially, prospective buyers need to identify suitable properties, conduct due diligence, and negotiate terms with the seller. Engaging a qualified real estate agent or legal professional is advisable at this stage to streamline the process and ensure a smooth transaction. Once an agreement is reached, the buyer and seller sign a purchase agreement, and the buyer typically pays a deposit to secure the property.

Understanding the regulatory landscape is essential for navigating real estate transactions successfully. Vietnamese law outlines specific regulations and documentation requirements for property transactions. These may include proof of ownership, land use rights certificates, and any relevant permits. Adhering to these regulations ensures the legality and legitimacy of the property transaction.

Navigating legal complexities in commercial property for sale demands a careful examination of zoning laws and land use restrictions. Zoning regulations dictate the types of businesses allowed in specific areas, ensuring compliance with these regulations is vital for avoiding legal complications. Additionally, obtaining the necessary permits and licenses for commercial activities within the shop house is important. This includes approvals from local authorities, fire safety certifications, and adherence to environmental standards.

While shophouses in Vietnam are a distinctive blend of commercial and residential space, the legal aspects of transferring or buying and reselling a shophouse are akin to any other property type, such as flats or houses. Moreover, it's important to be aware of Vietnam's specific house ownership rights for foreigners, as legal regulations in this regard are subject to unique considerations and restrictions.

In summary, a successful venture into shop house ownership in Vietnam necessitates a thorough understanding of the legal intricacies involved in property transactions. Engaging professional guidance, staying informed about regulations, and ensuring compliance with legal requirements are key to a secure and successful investment.

Final Thoughts

In summary, acquiring a shop house in Vietnam unveils a distinctive array of benefits, encompassing adaptability, prime locations, and lucrative investment prospects. Grasping effective methods to manage a shop house and navigating legal frameworks is essential for prosperity. Recognizing the value of shop house ownership in Vietnam's dynamic real estate sector, underscores the importance of professional assistance. For tailored solutions and smooth transactions, place your trust in Viettonkin - a premier consulting ally with unparalleled proficiency in real estate in Vietnam. Explore your shop house potential with Viettonkin, initiating a journey into thriving real estate ventures.

According to the Vietnam Association of Realtors, there are 300,000 real estate brokers in the country, yet only 10% hold licenses.

The majority of unlicensed brokers are novices who have recently changed careers to take advantage of the real estate boom.

They're untrained and unregulated, and analysts worry they'll endanger buyers, sellers, and the market as a whole. Some even blame them for instigating market disruptions and price bubbles by spreading stories about development.

Because the analysis was limited to the association's 300 member firms, the true percentage of unlicensed brokers could be significantly higher.

Before Covid-19, at least 1,000 businesses existed.

Meanwhile, according to data from the Ho Chi Minh City Construction College (HCC), the number of applications for real estate broker licenses in the South has increased by eightfold this year, with 2,186 people taking the broker's examination in the first five months of this year, compared to 275 last year.

The government made licenses compulsory in July 2015, and all licenses issued before that were effective until 2021, said Luong Dinh Thu Van, CEO of real estate training facility Mogin Institute in HCMC's District 1.

"Many people were unable to take the exam for a new license last year because of Covid-19.”

Brokers who operate without a license risk being fined VND60 million ($2,600), she said.

To promote openness in the real estate industry, the HCC has suggested creating a site for validating broker credentials.

It also proposed eliminating the requirement for a high school diploma in favor of allowing those with starter credentials and more than a year of experience to take the broker's examination.

It went on to say that easing eligibility will assist independent brokers in practice professionally and in accordance with rules and regulations.

Source: VNExpress

Industrial land rents in Ho Chi Minh City have reached a new high of $198 per square meter per term, outpacing all other cities with a 90 percent occupancy rate.

It was followed by Hanoi at $140 and Da Nang City at $80, according to a survey by consulting firm Cushman Wakefield. The average rent in the southern region is $135, whereas the average rent in the northern region is $109.

Due to multinationals' shift of manufacturing from China, northern industrial hubs are experiencing an average occupancy of 80%. The average rent in the central region is $34 per month, with a 67 percent occupancy rate.

Food processing, heavy industries, oil, energy, textiles, and footwear are the prevailing industries.

According to research by real estate firm Jones Lang LaSalle (JLL), rents in southern cities were $120 per square meter per term in the first quarter, up 9% year over year.

As the economy reopened, international corporations boosted their investment in Vietnam, causing the surge.

Colliers Vietnam stated that industrial land rents in HCMC have risen by 8-9 percent yearly in recent years, and businesses are moving to other southern cities such as Binh Duong and Long An due to a lack of space in Vietnam's main metropolis.

According to Savills Vietnam, the government is pushing multinational companies to relocate their manufacturing to Vietnam, with a focus on high-value-added industries.

Despite existing barriers that can hinder efforts of foreign investors, Vietnam's industrial real estate is predicted to be more active than ever in 2022, with limited land funds and government legislative backing. As real estate-related transactions are a complicated commodity, the parties involved must conduct extensive research and make specific strategies to assure long-term value. With an experience of more than 10 years in consulting, Viettonkin is one of the leading firms in the industry. In order to not miss out the golden time, do not hesitate to contact Viettonkin for amazing insights and guidance on this expanding market. Learn more about us and how we can help you minimize investment risk in the Vietnamese market here.

Source: VNExpress

Buying and owning real estate is an investment that can be both satisfying and lucrative. Prospective real estate owners can use leverage to buy a property by paying a portion of the total cost upfront, then paying off the balance, plus interest, and over time.

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Why Is Property Promising For Investment?

One of the primary ways in which investors can make money in real estate is becoming a landlord or a rental property. While people who are flippers, buying up undervalued real estate, fixing it up and selling, they also can earn income. Real investment groups are a more hands-off way to make more money in real estate.

Some investors choose to involve and manage their portfolio themselves, while others have full-time jobs and trust investment companies to manage their investment from sourcing the right property to find the right tenants and supervising the maintenance and repairs.

Furthermore, investing in property means that you can secure leverage, a mortgage loan in order to maximize your investment. You are likely to secure a loan from a bank for increasing the amount of money you have to invest in shares.

By investing your money into property, you can increase the value of the investment significantly. If you are spending it wisely, you can add considerably more than you spend. Investing in property somehow is a way of hedging against inflation. With high inflation, your rental income and property would increase significantly, as the cost of living goes up, so will your cash flow.

But with this pandemic going on, a lot of people ask themselves, is it the right time to invest in property? Some people say that real estate is a safe investment, but will you invest your money in a property business at this time?

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The Worst Thing Happens To The Property Sector

The market has slowed down significantly pretty much everywhere, even in places where real estate sales are allowed to proceed more or less as normal. During the pandemic, overall consumer confidence is low, which means they are showing hesitance to purchase something big, like a house. However, sellers are also reluctant to list their homes to be sold. 

According to property consultancy Cushman & Wakefield, this outbreak somehow threatens the recovery of the Indonesia housing market, with sales of high-rise flats likely to fall by 30% in this first quarter.

The credit rating agency, Moody’s noted that, In April the Indonesian rupiah had slid against the US dollar to its weakest level since the 1998 Asian financial crisis had damaged the ability of the country’s developers to pay debts.

Managing Director at Cushman & Wakefield Indonesia, David Cheadle explained that several developers are already facing cash flow difficulties. The COVID-19 outbreak has disrupted developer revenues due to declining sales. It also gives an effect to buyers too, as the social distancing restrictions and work-from-home policies have been applied, and it adds to the constant burden of construction loan interest rates of around 10% to 11% of the loan value.

Due to coronavirus, In March, the sales of apartments were estimated to be lower by 25% to 30% in the quarter than the average of 2.400 units in the final two quarters of 2019. Meanwhile, the sales of landed residential units dropped 2% to 3% from the previous month.

Even though the global economy has been hit by COVID-19, including Indonesia’s economy, the real estate developers and property investors still believe that investing in property is a long-term development.

The Challenges Might Exist For Real Estate

Deputy Chairman of the Indonesian Real Estate Company Association (REI), Rusmin revealed that investment in the property sector will remain attractive, as it can be a long-term investment, like 3-5 years. It is possible that the future of the investors in a property will be brighter.

He hopes that it will be recovered soon as at the end of this year or the beginning of next year. He also added, both obstacles and challenges for the property investment are, how fast is the country to handle this case, like COVID-19. In addition, the Large Scale Social Restriction Policy of PSBB also can be a challenge for new investors and real estate developers in Indonesia.

These problems that need to be fixed are still the same, including the bureaucracy, labor, infrastructure, legal certainty, and incentives.

The Opportunities For Real Estate

Property consultant, Colliers International Indonesia mentioned that, if you prepare to invest a property at a time like this, it would be a smart move. Colliers International Indonesia’s Advisory Service Director, Monica Koesnovagril said, invest in a property, such as purchasing land would take years to begin processing it.

Some of the land that was purchased at this time, are considered to be built as a new project for the next few years. Additionally, when the presence of Indonesia's new capital city is here and the pandemic is done, it could be able to increase the sales of the property industry in Indonesia.

At this time, for long-term property business, the latest project leasing and sales is expected to be adjusted. Both developers and property owners must have sufficient supply to accommodate demand.

As quoted from Antaranews, investment in a landed house is also a good investment, and they encourage that people should not hesitate to invest in property industry, because it is a long term, while the COVID-19 might be here today, but it will be gone soon. Unlike the property, as the population is more growing, they will need more houses to live in. 

An Indonesian public figure, Ida Ayu Dewi has an opinion, the purchasing power in a property industry, especially in landed houses, would be quite good. She added, if you want to invest in a property, you should consider the location, such as, the distance from public transportation and public health, also the facilitation that you will get later. No matter if it is an apartment or landed house, as long as it is affordable for you.

In conclusion, investing a property is still one of the best investments after all. Whether it is during the normal time, or the outbreak, as long as you have the budget and can pay the loan later, it does not matter. Keep it in mind, property purchasing is a long-term investment and there will always be a right time to invest in property. You can read our articles about the impact of Coronavirus on Indonesia's property market here.

The global real estate industry is being battered by the coronavirus, and it’s still going on. The effect on real estate will vary by sectors and markets, while the extent of the effect will be depending on how long is the economic shutdown.

The sectors of real estate that have been hit hard are hotels, restaurants and other entertainment retail, especially in tourist areas. Then, followed by retail and housing, particularly second-home and luxury homes.

Supplies that the builders and developers need are being interrupted as the workers stay home, due to business close down, and quarantines. Huge numbers of layoffs also will lead to further contraction in consumer spending.

The effect on real estate may vary too, such as commercial real estate, like housing and homebuilding. The homebuilders got affected not only on the demand from home shoppers but also the supply impact of materials that they normally import from China. But, China’s factories and businesses are now restarting after being on hiatus for months.

In a new survey by NAHB, 81% of respondents said that coronavirus has an adverse effect on traffic of prospective home buyers, and it’s probably more now with the escalating lockdowns. Another 54% has reported they need to finish homes and gather the building materials.

However, this kind of situation also happens in Indonesia. Before the coronavirus strikes, the performance on the property sector had actually begun to rise positively if to be compared years ago.

But when the virus is coming, the property sector is having a hard time once again. To anticipate all of these, the government has provided stimulus packages. In March, Jokowi announced the government has prepared a budget of 1.5 trillion rupiah (US$104 million) into its subsidized housing program which is expected to cover financing for a further 175.000 new homes. Meanwhile, 800 billion rupiah (US$55 million) will be used to cover interest payments with the rest going to pay for subsidies.

Let’s take a look at Indonesia's Real Estate!

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Is Indonesia’s Real Estate Affected?

According to CNBC Indonesia, the decrease is not only for the sales but the loans that people need to pay as well. The difficulty of paying the loans at this time is high. However, The Chairman of DKI Jakarta REI Regional Management Board, Arvin F. Iskandar added that even the sales dropped, but you need the costs to maintain it. 

Currently, there is a significant decrease in turnover and volume of the property sales in the market. It will clearly have an impact on the ability to pay off the developers to banks for the debt obligations.

Arvin F. Iskandar also emphasized that almost all the progress of real estate projects in Greater Jakarta is affected by the outbreak. Especially those using materials or raw materials from Corona affected countries, and the developers have difficulties in bringing these materials as well.

With these situations, however, all the operational costs and loan interests must still be paid. The coronavirus impaction on Indonesia’s real estate is real and it might be getting worse as we don’t know yet, when this is gonna be over.

The big players in the property industry are at the same risk. Let’s mention Ciputra Group, through PT Ciputra Development Tbk (CTRA) and PT Intiland Tbk (DILD) are considering whether their ongoing property projects have to stop or keep continuing.

This year, Ciputra’s pre-sales are projected to grow by 9% from 2019, by 6.1 trillion rupiah to 6.7 trillion. But with this situation, the number may not be achieved yet.

Moreover, Head of Investor Relations & Corporate Finance Ciputra Development, Aditya Ciputra Sastrawinata explained positive catalysts that would drive incremental sales are the first home buyers or end-users that will buy houses with prices below 2 billion rupiah in which always in demand every year.

Chairperson of the Indonesian Real Estate Company (REI), Totok Lusida acknowledged that the effect had already spread and hit the national property sector. The current condition has the potential of reducing the productivity in building commercial real estate. Speaking about how long it will take or when it is gonna be ended, it is not easy to predict, but he hopes it will be back to normal as fast as possible, so the developers can continue their projects.

To Fight The Outbreak Impaction

Aside from the government stimulus package, one of the developers, PT. Metropolitan Land, Tbk. (Metland), offered their latest promo, called ‘Book Now, Pay Later Deals.’ If consumers book one of the houses between April and May 2020, they can start to make the down payment in August 2020.

The program is believed to be able to attract buyers and facilitate consumers who are looking for houses in the midst of current conditions. The price ranges from 400 million rupiah to 3 billion rupiah.

According to Director of Metland, Nitik Hening added consumers can get more benefits in this new program, in which the developers will give them a subsidize 1% of Household Loan Credit (KPR) from Bank Mandiri and BCA, free in charge, free gifts such as kitchen set, air conditioning, and shopping voucher worth for 10 million rupiah.

While in Bekasi, PT. Mekar Agung Sejahtera (MAS) Group is developing commercial real estate with 10 acres called Britania, Bekasi. They would target the consumers from Greater Jakarta, including Bekasi. These houses are located in the Tambun area and consist of 3 clusters, and start from 200 million rupiah or more.

Director of MAS Group, Sengkono Dharmawan explained, he saw that Greater Jakarta area, especially East Jakarta and Bekasi, have the most potential of the development of this commercial real estate.

PT. Samudra Bangun Raya also has strategies to fight this situation. The developer of Villa Kebun Raya Estate has an optimism and commitment to continue the housing development amid this outbreak.  The technical marketing director of PT. Samudra Bangun Raya, Muhamad Solihin said, that his commitment as a developer is making sure that the development is still going on even in this condition. He acknowledged that he has the strategy to attract consumers by offering online promotions and giving special gifts.

Everybody knows the coronavirus strikes is getting every sector a hit hard, especially the property sector, but looking at how the developers fight this condition, we can see the signs that Indonesia’s real estate is indeed surviving and attracting more consumers nowadays.