Real estate at the end of 2019: Need to be aware of bubble situation

Some experts believe that the real estate market in 2018 - 2019 period will be balanced, and after 2019, demand will increase more than supply. Therefore, the market needs to be alert to the situation of real estate bubble, in which the foundation soil segment is most likely to cause this situation.

The 2019 real estate market has gone half way. As reported by some real estate market research units, the data have a difference, but the overall picture of the market is showing a decrease in supply by year, but increased when compared to precious. The reason is that many projects have to stop issuing licenses to review the construction investment process. Besides, there are conflicting opinions about the real estate market that continue to develop or about to burst bubbles.

At the 3rd Executive Committee Meeting IV term (2016 - 2021) of Vietnam Real Estate Association took place in Hanoi on July 27, Ph.D. Le Xuan Nghia, an economic expert - a member of the National Monetary and Financial Policy Advisory Council, provided some information on the global economic and financial situation, at the same time give some warnings for the real estate sector alone.

According to Mr. Nghia, over the past time, attracting foreign investment has increased, especially investment from China. Vietnam's exports to the US increased. The gold market increased strongly, and it is forecasted to continue to increase in the long term. For the real estate market in the period of 2018 - 2019, Mr. Nghia said that the market started to balance. After 2019, demand will increase more than supply.

Ph.D. Le Xuan Nghia.

"However, after this period, the market needs to be very wary of the situation of real estate bubble, no matter how much price is and even if there is a supply, do not sell", Mr. Nghia warned. According to him, in the segments, the ground is most likely to cause this situation. Therefore, careful surveys and analyzes are needed and recommendations are appropriate for adjustment.

According to Mr. Nghia, in the future and even now, businesses are and will be facing difficulties such as tight credit, stricter laws, slow disbursement of public investment... This is unfavorable signals for businesses that lack capital and legal problems. Besides, strong economic development raises concerns for Vietnamese enterprises, especially when leading technology enterprises in the world "jump" into Vietnam market. They wait for Vietnamese businesses to face difficulties, and it is difficult to survive. Or they wait for the real estate bubble to "explode" to seize the opportunity" Mr. Nghia predicted.

According to this position, we need to be alert in front of some trends: the fragile global financial market. Most are bank loans, procedures are slow, so it is easy to "show up" for foreign businesses. In the above context, Mr. Nghia said that businesses need to speed up the investment process, propose problems to promptly remove.

Mr. Nguyen Tran Nam, former Deputy Minister of Construction, also has a warning on the real estate market. He said, it can be seen that this is a "defensive" stage, not a "rushing forward" phase. According to Mr. Nam, Vietnam's real estate market is currently moving in a context that is not favorable and somewhat quiet. This has been forecasted from the end of 2018, regarding land planning, procedures are tightened. These are two important factors in the country affecting the market.

In addition, the US-China trade war and the Middle East hot spots are the most influential factors for economic growth. In the first six months of 2019, market results were still positive but compared to the same period in 2018 there was a decrease. "In general, the market is facing certain difficulties" Mr. Nam said.

Mr. Nguyen Tran Nam.

Mr. Nam said that the current market situation is different from the crisis in 2010. "At that time, the crisis was caused by surplus goods without buyers, while money was poured into real estate. Now, the purchasing power of people is very good. Like Ph.D. Le Xuan Nghia, in Vietnam consumption index is still good, goods have a lack of supply” Mr. Nam said.

However, according to Mr. Nam, the real estate market still has bright spots. Firstly, tourism real estate grows steadily. Secondly, industrial real estate also has many positive signs. In the first 6 months of 2019, FDI investment increased by 67%, nearly double compared to the same period last year.

From an investor's perspective, Mr. Nguyen Quoc Hiep, Chairman and CEO of GP Invest, said that the current market is more complicated and difficult. In the first six months of this year, Hanoi only approved 6 projects while the city currently has 10 million people. “We have encountered projects that changed the concept of the Land Law 2014. Law enforcement agencies have changed their processes and concepts. Having completed the administrative procedures, now the change is considered to be redone from the zero. This is the first thing I think the Vietnam Real Estate Association needs to make petitions on the legislative side" Mr. Hiep said.

According to Mr. Phan Huu Thang, former Director of Foreign Investment Department (Ministry of Planning and Investment), the wave of foreign investment will increase. For the real estate market, it is necessary to ask questions, whether it is necessary to call for foreign investment or not, if so, to call in which areas, which areas have been done, which fields have not been done yet and need to focus on calling for investment. "We need to have an early assessment of the capacity of Vietnamese enterprises, from small to large, to see how much domestic enterprises can do, and where to call foreign investment" Mr. Thang said.

According to Tam An