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Banking & Finance

Real estate shares hold promise

Released at: 11:03, 03/12/2015

Real estate shares hold promise

Conference discusses potential of real estate shares given current conditions.

by Hung Nguyen

Vietcombank Securities (VCBS), the Ho Chi Minh City Stock Exchange, the Dat Xanh Group (DXG), and CBRE recently organized a conference on Vietnam’s real estate market and the prospects for real estate shares.

Vietnam’s real estate market is recovering with a range of supportive factors in place, according to a representative from CBRE, such as interest rates falling and credit terms extended to 25 years, a young population structure and a high marriage rate creating strong demand for housing ownership, rising monthly household incomes, a diversification in market supply, with the appearance of more and more small houses and apartments that match financial capacity, profit margins on luxury apartment leasing being attractive investors, and infrastructure and the legal framework becoming more favorable for the market.

The sale of apartments has continued to rise, enhancing capital flows. In Ho Chi Minh City the number of apartments entering the market in the third quarter totaled 10,114, an increase of 200 per cent against the same period last year. Of these, 7,862 were sold, an increase of 88 per cent year-on-year, with average prices being 2.5 per cent higher. CBRE said that prices at existing projects are significantly lower than prices at new projects, but that consumption was still high and indicates promise in the market.

In evaluating the real estate market in 2016, the representative from CBRE said that Vietnam’s market is in the process of recovering, with supportive factors including Vietnam’s international integration via FTAs and the TPP, the loosening of policies on interest rates, the introduction of regulations on foreigners buying houses, and better infrastructure encouraging the development of new projects.

Mr. Ha Duc Hieu from DXG said the supply of new apartments in 2016 in Ho Chi Minh City and Hanoi would be 50,000 and 24,000, respectively. The low-medium market segment still has good liquidity. Population and personal incomes are increasing significantly, which will result in higher demand for real estate.

Investment opportunities

The Deputy Director of the Research and Analysis Department at VietinBank, Mr. Dang Tran Hai Dang, said that Vietnam’s real estate sector is recovering remarkably and this has a positive impact on real estate shares in the stock market. Most have performed better then the VN-Index over the last three months, he said, by about 5 per cent.

Real estate has accounted for a significant percentage of the trading volume in stock markets over the last six months, at 18.7 per cent, which shows the attractiveness of the sector to investors.

Stocks investors may consider, he said, were VIC, DXG, KBC, CEO, ITA, KDH, and NLG. He emphasized market segmentation, with investors needing to be careful about available information and consider what they see as the important criteria during each stage of buying and selling.

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