Grasping macro context to identify market gains

At the event, which focused on macro knowledge in real estate funding, Rich Invest founder and CEO Rich Nguyen noted that the three crucial factors for investors were knowledge of macro factors, a deep understanding of finance, and excellence in execution.

VIR’s Macro Knowledge in Real Estate Investment talk show took place last Friday

“Having a good grip of macro factors will help investors to understand market rules, and from there harvest success,” said Nguyen. “Without good financial management skills, investors may be forced to sell their assets at low prices.”

Mastery of implementation, from surveying and valuation to negotiation, selling, and marketing, is key to generating high profitability, he added.

Nguyen believes that though real estate is one of many segments, it inevitably suffers impacts from macroeconomic factors more strongly than other areas as it relates to land, the nation’s top resource.

Nguyen Thi Bich Ngoc, founder of sustainable real estate development community RealCom, said, “To become outstanding investors, there are two options: taking direct ventures and drawing lessons from experience, or learning constantly while updating on macro knowledge that has a strong impact on market movements.”

The macro economy, both domestically and globally, always casts a direct impact on real estate market performance, Ngoc added.

The real estate market is facing mounting challenges. As the mobilising rate is trending to go upward, the lending rate is inevitably put under pressure, which is a major impediment to the real estate market in the face of increasingly scarce credit supply sources and higher lending costs.

Globally, the US Federal Reserve has twice raised the base interest rate by 75 basis points to cope with rising inflation. It may raise it by an additional 50-75 basic points in its upcoming September policy meeting.

Meanwhile, the European Central Bank raised interest rates for the second time in August by 75 basis points and is likely to make further strong interventions. Vietnam is not an exception to these global trends.

In August, many commercial lenders raised the mobilising rate by 20-50 basis points, depending on specific terms.

According to financial services provider FiinGroup, the real estate market has felt a strong impact from the new policies set by the State Bank of Vietnam and the Ministry of Finance.

For instance, once the amended draft to Circular No.39/2016/TT-NHNN comes into force, it will likely scale down capital sources as the amended draft rules provide more stringent lending requirements for borrowers, it said.

Besides these challenges, there are several factors underpinning real estate market growth in which the accelerated implementation of the national programme on socioeconomic recovery and development will play a key part in providing a buffer for the sector.

Other supportive factors include infrastructure investment, accelerated public investment, and the housing development strategy for 2021-2030.

Identifying investment opportunities in the current climate, Ngoc from RealCom said, “Building new urban areas in localities always generates high investment value thanks to good infrastructure and stable legal aspects.”

The domestic housing market is expecting tremendous demand in the face of rapid urbanisation and a golden demographics rate. Localities must ensure a large housing supply for people and shape core urban metropolises, Ngoc added.

According to Rich Nguyen, land plots have become a favoured choice thanks to their good profitability and newly-emerging development areas are also noteworthy, but investors need to understand that macro factors are also decisive to the development of real estate in any particular area.

“Having a good grip of the bigger picture, market trends, and setting the right timing for transactions are decisive to the success and failure of ventures,” said Nguyen.

Land assets failing to shift despite cuts The lack of related legal conditions, unclear information, and inappropriate prices are some of the problems that are rendering real estate units offered by banks unattractive to buyers.

Real estate market would be better if credit growth targets rise: experts The State Bank of Vietnam's decision to raise credit growth targets for banks is expected to create favourable conditions for businesses to lend capital, including real estate firms, according to experts.

Loosened credit may not be enough for real estate capital While the State Bank of Vietnam (SBV) has expanded credit limits for several banks, the stricter control of credit in areas like real estate may impact project liquidity in the sector.