July 23, 2019 18:16

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What challenges do Vietnamese real estate businesses face in 2019?

11:00 | 22/03/2019

VCN - 2018 is considered a favorable year for real estate in Vietnam, and in 2019 real estate market is still growing. However, to create a breakthrough, real estate enterprises still face many challenges.

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Green real estate is said to be a good investment trend for real estate businesses in 2019. Source: Internet

Barriers to administrative procedures and legal papers

In 2018, real estate investors and investors witnessed many events that made them shy. This is from the fact that foreign investors have shifted their production into Vietnam and the need to seek land for real estate investment (especially industrial zone real estate) increases the level of competition with domestic real estate businesses, most evident through the land fever and industrial zone land occurred in Ho Chi Minh City, Long An, Ba Ria - Vung Tau, Da Nang and the North Van Phong, Van Don and Phu Quoc economic zones.

At the same time, local governments and ministries have been promoting the review of the use of public land funds and the dispute over land allocation in large projects, causing project legal issues to become more difficult.

Many problems arise after the project has been completed such as the progress of granting Certificate of Ownership, the establishment of a Management Board, separate joint disputes, maintenance funds, safety security ... also cause headaches for the investment owners.

Representatives of investors surveyed by Vietnam Report said that administrative procedures and legal documents are the biggest obstacle for enterprises when deploying and operating projects in 2018, and it still is the obstacle in 2019 if nothing changes.

Unknown to build a strong brand image

According to the recent survey of real estate customers of Vietnam Report, more than 90% of customers said that "prestige investors" is the most influential factor in their decision to buy houses.

In fact, the media plays a particularly important role for the reputation of real estate investors, by any action of the business, from M&A deals, projects are about to be implemented, or problems with residents in buildings, apartments... are communicated with rapid speed, spread through the internet and especially social networks. Media report results in 2018 - 2019 of Vietnam Report showed that big investors like Vingroup/Vinhomes, Novaland are the two names with the most appearances, with thick information coverage on influential newspaper pages. However, in terms of the "safe" level of information (the positive and negative difference in the total number of encrypted information of enterprises), Sungroup is slightly better.

This shows that, in order to effectively communicate and preserve the image and reputation of businesses, businesses need to carefully select information before announcing. With the regular use of communication as a means to promote products, the most mentioned topic on the communication of real estate enterprises in the past year is Products (accounting for 24.7% of the total volume of information). Encrypted news), while the topic groups of Human Resources, Social Responsibility or Sponsorship... are not very mentioned, invisibly reducing the diversity of corporate image in the community eyes. Therefore, in the context that the market is forecasted to only grow "lightly", real estate enterprises need to focus on branding and reputation instead of investing in expanding market share.

Capture key trends

According to experts, there are 3 outstanding trends that are expected to drive the growth of the real estate industry:

Firstly is the development of green real estate, green buildings - clean and beautiful and friendly with environment. There are now a lot of green standards in circulation: Edge (from the World Bank's IFC); Green Mark (Singapore), Leed (USA), Lotus ..., but in fact there are very few projects recognized as "green" in Vietnam. The number of projects with LEED certification in Vietnam in 2017 is less than 3%. If compared with Singapore (currently 37% of green buildings), Vietnam is still very far away. The main reason is that the investment capital of these real estates are very large, requiring professionalism from design, construction, use of materials, finishing to operation. In addition, climate change and living environment also significantly affect the "green" standard of the project. However, with the increasing demand and the level of spending for safe, comfortable and smarter living space of customers, it is certain that green real estate will become the main trend of the industry in the future.

Second, industrial zone real estate continues to have potential for growth thanks to the shift of production into Vietnam in the past few years. Vietnam is strategically located in Asia, with land borders with China, and many large seaports are connected to industrial zones because the system of large roads and highways is being focused to invest and complete. This is considered a very good investment opportunity for industrial park investors, especially in the North when the demand for leasing from large technology corporations such as Samsung, LG ... is growing very high.

Thirdly, although it has cooled down compared to the previous year, real estate for resort - tourism still has a lot of development. The latest report of BCG shows that in 2017, Vietnam earned 8.3 billion USD from international visitors, lower than Indonesia with 12.6 billion USD; Singapore is 18.4 billion USD, Thailand is 52.5 billion USD. The reason is not because the number of tourists entering Vietnam is lower but because tourists have less opportunity to spend money in Vietnam. It can be seen that the development of high-class resorts, entertainment and shopping services is not really compatible with Vietnam's tourism potential, so investors can continue to research and develop models of shophouse, condotel... in a modern and more friendly way with customers.

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Besides, according to CIA World Factbook - 2017, the urbanization rate of Vietnam is only estimated at 35%, but Vietnam's urbanization rate is at the top of Southeast Asia reaching 2.6%/year. Along with that, the increase in the number of foreign workers and engineers working in Vietnam is expected to boost the development of housing and apartment real estate in big cities. In fact, the current supply is relatively high in all segments: high-end, mid-end and affordable. Therefore, residential real estate and apartment buildings are forecasted to remain potential but there is no sudden change in 2019.

By M.Dung/ Huu Tuc