Research on panoramic real estate market in 2014 and prospects for the future by Dr. Tran Kim Chung- Deputy Director of Central Institute for Economic Management gave three scenarios for Vietnam real estate market during the period from now to mid-2015.
According to the research, elements for market recovery have appeared before May 2014 after declining in 2011-2013 period. By mid-2015, real estate market will have short-term prospects to receive new impulses and get better. Specifically, three scenarios given by Dr. Tran Kim Chung as follows:
Under Scenario 1, from the most positive viewpoint, Vietnam real estate market will see rehabilitation. Uncompleted projects will be implemented; completed ones will be in use; ones located at prime locations will have good liquidity in market. The transaction will be active again and a number of new products will be launched.
Following Scenario 2, only completed projects will get transactions; a few ones will be rehabiltated; a few dominant firms will continue to implement their promising projects. On the market, transactions will be gloomy, only completed projects can be sold. New investors who have the real competence will appear.
Under Scenario 3, in the worst way, real estate market will continue to shrink. Businesses keep withdrawing capital from the market. Only completed projects can be transacted, some will fall into difficulty. Some powerful financial organizations will appear with the aim of taking over real estate projects.
According to Dr. Chung, among three scenarios above, the second is most likely to occur. In particular, the real estate market in the medium term tends to get better. From Q2 to Q3 of 2015, the market will receive a new impetus from the participation of Vietnam in Trans-Pacific Partnership(TPP) Agreement. In addition, the world economy has been gradually stable, thanks to impacts of new policies, foreign investment and remittances to the market.
A new cycle of real estate market in the long term will be formed. In order to accumulate energy for the economy in this new cycle, quiet phase of the market is long enough. However, if there is a new cycle, its extent and scale will depend on many factors that can not be configured at present time.
In the past 11 months, real property market has gradually recovered. Transactions at the 2 big cities of Hanoi and Ho Chi Minh led the market to soar. In Hanoi, volumn of successful transactions in Nowember 2014 reached nearly 10,000, up 100%. In Ho Chi Minh City, it reached 8,850, up 35% compared with the end of last year. On the market, outstanding debt surpassed the peak in 2008, reaching 293,000 billion within 11 months.
In addition, another study on real estate market by Dr. Hoang Van Cuong from National Economics University also shows that the suspension of investment in 2010-2014 period will disrupt the supply of new property in market in 2017-2019 period. However, inventory and excess supply will be added to the market when the economy recovers, the supply - demand for property will be positively balanced in 2017-2019 period.
According to Dr. Cuong's forecast, the risk of real estate supply shortage will occur in 2021-2023 period if the stagnation of investment activities still happens and the tightened control of funding sources continues to extend in 2015-2017 period . Therefore, investors who have potentials and strategies need to be proactive in long-term investment strategies in 2016-2018 period to catch opportunities on property market in 2021-2023 period .