Ms. Duong Thuy Dung, Senior Director, CBRE Vietnam, said that in the past, there were many products emerging to replace long-term real estate, for housing products sold, there were 3 product lines: apartments, land-attached products such as villas and town houses.
On the morning of August 16, in Ho Chi Minh City, a seminar on "Real Estate Trends: International Experience and Vietnam" was held. The seminar was organized by VTV24 and Vietnam Real Estate Association (VNREA).
Speaking at the seminar, PhD. Phan Huu Thang, Standing Vice President of Vietnam Real Estate Association, said that this was still considered to be an early stage of development, the real estate market was still facing internal difficulties such as: structural type. The product model was quite different - social housing development goals had not been achieved; Territorial real estate development planning was not clear; The linkage in real estate investment among domestic enterprises, especially small and medium-sized enterprises, was weak and lacking;
Besides, according to Mr. Thang, “The orientation of attracting foreign investment into real estate has not been clearly defined (which segment, region, who should call for foreign investment? Industrial revolution 4.0 with great advances in technology has been having a strong impact on almost all fields, including the real estate market".
According to Prof. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, raised the question of how to bring the entire ownership system into the market effectively and said that the land use regime in Vietnam was long-term.
Vietnam has recognized long-term use of residential land, the main reason being in accordance with the traditional thinking of the Vietnamese people. The term land use regime has the advantage of making the land users more responsible, always wanting to use it fully within the time limit they have paid for land use, avoiding land speculation and financial hoarding into land.
"The most sustainable mechanism is that the land is used for a limited period of time in the form of annual rent payment. Land users have a high responsibility for the use, a high land use efficiency, and a cost reduction in commodity products, stable budget revenues" said Mr. Vo.
Mr. Vo added, when promulgating the Housing Law 2014 proposed that the term of ownership of apartment land was limited ownership, it would have the effect of embellishing and repairing apartments... but the National Assembly did not agree and said that Condominium land was also indefinitely. "Therefore, it is more difficult to say that residential land has a longer term. With the type of condotel, condotel can both be accommodated and conducive to business, my opinion is that residential land for long term, condotel should also stay long term" Mr. Vo said.
However, in a different perspective, Ms. Dung said that over the past time, the most welcomed product of the market was apartments for sale, until now are long-term or permanent ownership. The psychology of real estate buyers in Vietnam loves products with long-term ownership, so consumption in the market is high.
Ms. Dung cited data showing that in 2008, in the two major markets of Ho Chi Minh City and Hanoi, the supply offered was 15,000 apartments, the number of units sold was 8,000 units, but by 2018, the supply was up to 63,000 units and the number of units sold has reached 55,000 units.
Up to now, the consumption trend of buyers and investors is still the long-term owned apartments. Preliminary surveys show a fairly large transition. From 2014 to 2016, the number of buyers for investment accounted for about 65% compared to 35% just to stay. From 2017 to 2018, when there were more products in the mid-end segment, the perception of buyers was more open to condominiums, the purchase rate to stay up to 45%. Demand for buyers to increase, interest in apartment projects also increased. However, the number offered to the market is still very small compared to the actual demand.
In Ho Chi Minh City has 12 million people, Hanoi about 11.12 million people, while the number of apartments is only about 260,000 apartments. The number is too small compared to the demand, such supply is too low. So there is huge room for us to develop the market. Projects with long-term and permanent ownership, buyers also need to consider.
Ms. Dung also said that in the first 6 months of 2019, the number of projects offering decreased in comparison with the same period in 2018, if purchased for investment, we begin to have fewer options. A replacement product is a time-limited property that begins to receive buyers' attention.
For hotel apartments and resort villas, buyers are mainly for investment. In the past 5 years, the real estate market in Hanoi and Ho Chi Minh City recovered, then the real estate market recovered after 1 year. Although only limited ownership, the rental profit is higher than the investment in apartments in the city. In HCMC or Hanoi, there is an officetel - a hybrid between office and apartment, but there are many ownership issues.
"Obviously we have a shift somewhere with the needs of the buyers. We consider this to be an additional product, in 2016 - 2017, the sales volume was somewhere around 70-80%. By 2018, The number of units offered is high but the consumption is high. To date, Nha Trang has about 16,000 apartments and Da Nang has 19,000 apartments. The growth of the Nha Trang market has also increased year by year, in Nha Trang, all of This project is owned for 50 years. For about 1 year, investors have accepted to own 50 years until the law is clearer about owning this type", Ms. Dung said.
Ms. Dung also cited current sales figures from 60% to 100%. The return on investment is about 7% to 9% in the first period, at the time of the year, the supply was too much so the return on investment was estimated at only 6 to 7% at the present. For officetel, this is a hybrid product like condotel, but the story is less optimistic. From 2016 to 2018, the officetel market grew much higher than the condotel.
From 2015 to 2018, the number of officetel increased very high, the absorption rate up to 98%, currently there are almost no officetel products for sale. Based on CBRE's survey, the ability to sublease is not too good, currently investors are reselling in the secondary market, the selling interest rate is about 5 to 10%.
"The legal framework of this product is still very inadequate, buyers who signed the purchase contract also did not get a clear answer from investors. The arrangement of private paths with officetel with residents and officetel tenants requires private paths, which is also difficult. The officetel's rental capacity is poor. In 2019, there is almost no product offering for this officetel, the commitment to profit is not as high as the exciting years.", Ms. Dung said.
Sharing the same view, Ms. Nguyen Thi Thanh Huong, General Director of Dai Phuc Land, said that she chose the investor's profit commitment. For product lines with a term of investment demand, potential risks (related to the legality, financial support for investors). Therefore, in order to have a more attractive product term, the investor must commit to a more attractive profit.
Regarding the commitment of profit and keeping the profit commitment of the investor in condotel products over the past time, Mr. Nguyen Hoang, Director of R&D of DKRA Vietnam, said that in the period of 2015-2018, the resort real estate has raced on the profit commitment with the development of the real estate market. But in 2018, there are some condotel projects that failed to meet their profit commitment when put into operation.
"Our research shows that developers tend to reduce their commitment to profitability, to bring project management unit commitments into-hire professional managers. So this making investors pay attention to raising the investors and operating units, reducing the interest to commit to profit", Mr. Hoang said.
According to Nam Phong