Real estate market expected to recover when pandemic is under control

The COVID-19 pandemic significantly affects the real estate market but many expect a market recovery when the virus is put under control.

Hanoi - The COVID-19 pandemic has caused a slowdown in the property market but many experts believe this is only temporary and are pinning their hopes on a rebound once the virus is under control.

Su Ngoc Khuong, senior manager at real estate consultancy firm Savills Vietnam, said the outbreak of the COVID-19 pandemic in the second quarter of this year significantly affected socio-economic development. The real estate market saw declines in purchasing power and investors were more cautious.

Statistics from Vietnam’s largest property portal batdongsan.com.vn showed that after reaching a peak in March, the level of interest in the real estate market showed signs of decreasing.

Real estate searches on the portal in April dropped by nearly 18 percent against March with searches for land down by nearly 21 percent and apartments by 17 percent. Interest continued to decline in May with searches for residential land decreasing by 19 percent.

Notably, prices of apartments saw an increase of about 3 percent against the same period last year.

Deputy Director of the Vietnam Association of Realtors Nguyen Van Dinh said the shortage of supply was a major reason for the increase in the apartment prices in the first half of this year.

According to Matthew Powell, director of Savills Hanoi, the COVID-19 pandemic would continue to impact the real estate market, causing uneven development between different localities, different market segments and different projects.

It was important that the virus be put under control together with the vaccination programme, he said, adding that when the virus was successfully contained, investment would flow into the economy.

He, however, urged individual investors to study the information of property projects, planning and infrastructure development carefully before making decisions.

Mai Duc Toan from the Construction and Material Trading Group said not only the real estate market but other sectors were holding their breath for the updates on the pandemic.

“The market is still difficult to predict. Local land fever might occur. If the pandemic is successfully put under control, the market would bounce back in the second half of this year,” Toan said.

He added the real estate market development largely depended on the pandemic and pointed out that in the three previous outbreaks, prices were seen to increase in a number of segments, even forming large-scale land price fever at the beginning months of this year.

Ngo Quang Phuc, general director of the Phu Dong Group, said the real estate market had large potential for development and the outbreak would only have a short-term impact.

Phuc said that the market was expected to see robust development, providing the legal problems of real estate projects were tackled properly.

Director of Dai Phuc Land Nguyen Thi Thanh Huong said from the beginning of 2020 to date, despite virus outbreaks, the real estate market basically kept a solid foundation. There were not significant price drops or sell-offs but the market often saw stronger transactions and increases in prices.

According to Khuong, the property market would not see any breakthrough development because the Vietnamese economy was still struggling with the impacts of the COVID-19 pandemic.

Most transactions recently were from long-term investors who had idle money to pour into the real estate market, he said.

In the scenario of market recovery, the housing segment would be the most robust, driven by high demand, Khuong said, adding that while the pandemic affected incomes, housing demand would focus more on affordable homes.

He added that the resort and tourism property market would continue to suffer and retail property would struggle to compete with rising online platforms. The interest of investors in industrial property remained high but investment in this segment would not be as good as expected because of travel restrictions.