Agreement expected to usher in a new cycle of growth in Vietnam's real estate market.
Real estate investors in Vietnam are placing much hope on a breakthrough in the market following the announcement that the TPP was signed on October 5.
That there will be a turning point in terms of liquidity in the real estate market and in property distribution in Hanoi were common sentiments among investors when asked about the impact of the TPP.
Chance for investors
Similar to the Law on Housing allowing foreigners to purchase houses in Vietnam, the signing of the TPP is welcome news for real estate investors. If adopted, a number of procedures previously seen as barriers to foreign investment in Vietnam, including real estate investment, will become more straightforward. Vietnam will have to cut or remove many procedures as they relate to the eleven other partners in order to create favorable conditions for their businesses and citizens in the country.
Compared with developed countries in the region, home prices in Vietnam are cheaper when measures against income levels in the other member countries. As foreigners are now able to purchase houses in the country, higher housing demand, including purchases for investment and perhaps even speculation, is forecast for the future.
According to Ms. Vo Thi Diu Hien, Deputy General Director of the Saigon Thuong Tin Real Estate JSC (Sacomreal), the successful end to the TPP negotiations is expected to continue the opening up of opportunities in the real estate business in general and for Sacomreal in particular. “To seize the opportunities the TPP brings, especially FDI inflows into Vietnam, Sacomreal will launch more than ten large-scale projects in many different segments,” Ms. Hien said.
For his part, Mr. Ta Phuc Hai, Director of the Hoang Vuong Real Estate Floor, said that the number of people registering to purchase apartments in the last two days has increased markedly.
Not only residential but also the industrial real estate sector is also expected to increase sharply after the TPP comes into effect. According to the latest report from Cushman and Wakefield, more and more industrial occupiers will come to Vietnam to take advantage of the TPP alongside the other free trade agreements that Vietnam has secured. Therefore, demand for industrial property will continue to rise. “In addition, the demand for more roads, railways, seaports, and airports as the logistics market continues to grow will be a feature of the next decade and after in Vietnam,” the report stated.
Buyers also benefit
As the demand for any commodity increases the price will also increase. According to some experts, however, this rule may not necessarily hold true in Vietnam’s real estate market.
According to Nguyen Manh Ha, Chairman of the Board at the Phu Quy Land Co., the completion of the TPP negotiations will certainly bring practical benefits to Vietnam’s real estate market, especially for homebuyers. Along with the increase in supply, cheaper input materials should result in prices being more in line with the wallets of buyers.
Minister of Construction Trinh Dinh Dung has said that people will benefit from lower house prices in the future because more and more businesses now apply new technologies and use new materials, so costs and, therefore, prices will fall significantly. “Land prices in Vietnam are not overly expensive, and neither are house prices,” Minister Dung said. “It is certainly an attractive market for foreign customers, which will stimulate its development.”
- Minister of Construction Trinh Dinh Dung