What difficulties will the real estate market face?
Real estate market in the last months of 2018 and in 2019 transactions may continue to decline.
Supplyhead still crooked
The real estate market has declined sharply in the first 9 months of 2018 in terms of project supply, products and transactions in market segments. In addition, the appearance of virtual fevers in the prices of land plots, agricultural land, and illegally divided land in some areas across the country has absorbed a large amount of credit capital and social capital, negatively affecting the market.
The high-end and mid-range real estate segments still dominate the market supply in 2018. However, the high-end segment also has a clear shift towards factors such as quality, smartness, greenness, environmental friendliness, etc. which are valued. This trend will continue to develop in 2019. Industrial real estate can develop strongly in 2019 due to the trend of investors shifting production to our country, leading to the demand for offices for rent and apartments for rent.
The housing segment with high liquidity in the market but still not enough to meet the demand is low-cost commercial housing and social housing. The market supply is not enough to meet the demand but investors are not "interested" when the profit in this segment is not large.
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| The real estate market in 2019 is forecast to face many difficulties. |
Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said that the development of social housing projects to meet market demand is beyond the budget. Therefore, we must switch to low-cost commercial housing, and this segment should be encouraged.
“The government supports commercial housing with policies such as tax reduction, administrative procedure support... thereby attracting businesses to invest more in this segment, helping low-income poor people buy cheap houses,” said Professor Vo.
Find other fundraising channels
According to the Ho Chi Minh City Real Estate Association (HoRE), the most worrying issue of the real estate market in the last months of 2018 and in 2019 is the imbalance between supply and demand. When real estate supply still does not match market demand.
Enterprises are facing the challenge of the State Bank implementing a roadmap to limit credit to the real estate market. However, this is also an opportunity to restructure enterprises, restructure investment capital, gradually reduce dependence on credit loans to develop enterprises more and more strongly.
HoRE recommends that businesses should pay attention to the small and medium-sized housing market segment (1-2 bedrooms) with affordable prices. Businesses need to increase equity capital to strengthen their internal strength and attach importance to cooperation, joint ventures, associations, and mergers to form real estate corporations.
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said that enterprises should consider converting into joint stock companies to have conditions to call for capital from the society and orient to become public companies to be eligible for listing on the stock exchange. Enterprises need to make efforts to meet the conditions to issue corporate bonds, project bonds, issue shares, and at the highest level, list on foreign stock exchanges.
“The trend of enterprises choosing partners who are reputable and financially capable foreign investment funds and enterprises to cooperate in investment and business is also a source of capital mobilization. From there, project development will be enhanced, in order to increase resources and gradually reduce dependence on bank credit,” said Mr. Chau./.