Mr. Trinh Bao Quoc, CEO of SonKim Land (SKL), spoke with VET's Hoang Thu about the performance of the residential real estate market in 2015 and his expectations for 2016.
■ What have been the most notable features of Vietnam’s residential real estate market in 2015?
Vietnam’s economy has been stable during the last 12 months. The stock market index has increased 12 per cent, inflation has stabilized at approximately 3 per cent, and interest rates remain at 8-9 per cent.
Its real estate market has experienced a downturn and is now recovering. For condominium projects, the average price is now in the range of $1,600-2,000 per sq m and will increase in the near future.
Among Southeast Asia countries Vietnam is now one of the most attractive destinations for foreign investment, thanks to its economic growth and new regulations on property rights for foreigners, and housing prices are still affordable compared to elsewhere. At the same time it guarantees the highest return on investment. A number of agreements, including the TPP, the EU-Vietnam Free Trade Agreement (EVFTA), and the ASEAN Economic Community (AEC) will further promote the development of Vietnam in the long term.
Many international investors are entering to secure a share of Vietnam’s real estate market, such as Hongkong Land and Hamon Developments cooperating with SKL to develop The Nassim and Gateway, Gaw Capital and their local partner NP Capital buying four real estate projects from Indochina Land, and a $279 million purchase by the Amata Group of land in Long Thanh, Dong Nai province, to develop a $500 million residential and industrial project.
As an emerging market, Vietnam has many factors favorable to investors or project developers, such as its “golden demographics” in terms of the working age population, rapid urbanization, and a high literacy rate. While investing in a developing market like Vietnam entails many risks, it also promises a higher return to those who do well.
■ SKL and Hongkong Land announced The Nassim development in September. Why did you choose to invest and develop a luxury project at this point in time?
The business strategy of SKL focuses on the high-end real estate segment. Selling an apartment is not just about selling a product. It’s also about a different lifestyle for residents. We expect our sophisticated projects, Gateway Thao Dien and The Nassim, will contribute to creating a new luxurious lifestyle with a comfortable and modern living environment and a high level of services. Thanks to the strong economic recovery after a few years of struggle, Vietnam’s real estate market is now ready for premium products.
Since many other project developers have been only focusing on the mid-end segment, the high-end segment has many opportunities and demand is real, so SKL will become one of just a few developers to address this high potential market.
■ What are your forecasts on the performance of the residential real estate market in 2016 regarding the high-end, mid-end, and low-end segments?
During the 2016-2018 period, as new regulations on housing ownership for foreigners will be completed and fully executed, there will be a large investment inflow into Vietnam, especially for high-end real estate for foreign buyers.
Housing demand in general will increase significantly due to the rising population, while interest rates and inflation are under control and the law on foreign ownership is being relaxed.
Housing prices in Vietnam are still much cheaper than in other countries in Southeast Asia, especially in the high-end market, which has potential for foreign investment. Rapid urbanization also leads to higher demand for housing.
There will be greater competition in the high-end segment. Beside existing well-known projects such as Gateway, The Nassim, Vinhomes Central Park, Masteri Thao Dien, and Sala, there are many other projects seeking market share in the segment. In 2018 the market is expected to have supply of nearly 20,000 high-end apartments.
Clearly there will be more competition but this will push every project developer to come up with a strategy to differentiate their products. For example, with our high-end project The Nassim, besides the wonderful view of the Saigon River we have a private lift lobby, Asian and Western kitchens, as well as high quality European furniture from Duravit, Hansgrohe, and Bosch.
■ What are SKL’s business plans for 2016? Which segment would you care to invest in next year?
SKL’s business strategy focuses on the luxury segment, as I said, and our two projects this year, Gateway and The Nassim, have been successful and very well received by the market.
Next year we will continue to develop other projects in the same segment and also in hospitality, including resorts and serviced apartments. At any project SKL develops we stay with our golden philosophy: good location, luxurious design, upscale management services, and upscale facilities, to provide an upscale lifestyle.
- Trinh Bao Quoc
- SonKim Land
- the Nassim
- Vietnam real estate market