Reatimes: Which direction does real estate investor’s cashflow pour into?
Mr. Duong Duc Hien: We have to picture this, in a developing market, investors only account for about 30% of the project, 50% are speculators, and the rest are actual consumers. This shows that our primary market are mainly actual buyers, not investors.
2019 continues to be dominated by the mid-end segment with a reasonable price, suitable for the majority of people. Besides, housing products such as townhouses, semi-detached houses, or houses near social facilities will certainly be attractive to our primary market. Hence, businesses must offer practical product for the purpose of residing.
Mr. Duong Duc Hien, Director of Residential Sales for North and Central Vietnam at Savills Vietnam.
So the current 30% investors, especially in the Hanoi market, which basket are they putting their money in?
The 2016-2018 period had a limited number of attractive products; thus, particularly special projects were immediately absorbed by the market. At this current stage, investors are becoming stricter and more fastidious with different product lines. They are also giving criteria to screen products and developers. In addition, before spending money, actual buyers are now deeply concerned about a product’s location, convenience, and utilities. This shows that there are more and more criteria for housing products are interested by consumers.
The nature of Hanoi investors, people with thin and few capital, is to invest in Hanoi or nearby opportunities. The resort real estate is the main market attracting idle money, often from professional investors, 10% for rent, 30% for investment, and 60% for ownership.
The current tendency of the majority of customers is to return to original real estate products such as sea villas, sea condos, and vacation resorts. This is because derivative real estate products are often only contemporary; and over time, some will be eliminated while others will change according to tastes, trends, and the development of the economy.
In the process of development, derivative real estate products are faced with many difficulties and obstacles, in which the biggest barrier is the legal system. With new product lines, sometimes policies and regulations cannot keep up, so the legal framework for many derivative products is still unclear and inconsistent.
This has a significant impact on the trading activities of these product, eventhough investors have been making great efforts in product development and operation transparency.
On the other hand, original products are always the root of the real estate market. Every human activity is associated with real estate: living, working, doing business; therefore, orinal products will be the never-changing core of the market.
What about provincial markets?
The cashflow towards provincial markets are mostly from speculators. There may be investors but they are often locals living in the province. The provincial market in 2018 really attracted attention. The basic principle is that because provinces are growing strongly, the speed of urbanization is fast, the enterprises and the rich in the provinces are greatly increasing.
When living conditions are high, people demand better life’s quality and safety. That is why the provincial real estate market develops very quickly, to meet demand. Many investors who have houses in big cities, still prefer to own houses in other provinces. In particular, investors will be attracted to any province that offers inviting policies.
What are your thoughts on the projects developing along highways between big cities and provinces?
Often time people assume that road opening means opportunities for residential real estate; however, long-distance highways do not have many exits and you are allowed to stop only at some certain points. If there is a project developing along highways, it will not be sold to anybody.
Moreoever, highway project developers invest a huge amount of money in professional and modern rest areas, so no vehicle will suddenly stop in the middle of the road to do any business.
In fact, in other countries, after establishing highways, real estate is developed following the wheel rotation. Accordingly, real estate projects will be attractive to buyers and investors if it is located in government planned areas, connected to community and highway systems.
