Real estate developers have felt the pain as the central bank has limited loans for non productive sectors to curb inflation, prompting many investors to take flight, but the current conditions suit long-term investors, experts said.
The market research company CB Richard Ellis Vietnam (CBRE) released on Wednesday a market viewpoint entitled ‘Growth Pains’ to assert that opportunities are still there for long-term investors.
“The long term potential for real estate remains bright despite any of the current issues as Vietnam is still in the infancy of its growth,” said Marc Townsend, managing director of CBRE.
He said with a low level of urbanization, as compared with other countries, and an increasingly wealthy and young population, Vietnam was well positioned for the future.
The pain being witnessed in the economy at present, according to the market observer, would soon be forgotten when long-term opportunities were realized.
Adam Bury, head of research and consulting for CBRE, commented on the market that after years of lending into the real estate market, the country was now at the point where the State Bank of Vietnam was considering the consequences of this on the economy.
“While capital is no longer available from banks, some within the real estate industry must find alternative methods of financing, or appropriate exit strategies from some of their projects,” Bury said.
According to CBRE, the market recorded international investors who have already targeted and gained traction within the residential segment, including Guoco Land, Keppel Land and Prudential.
Among projects transferred recently, the Australian-backed developer Refico transacted the office building Centre Point on Nguyen Van Troi Street in HCMC to a Japanese investor.
The company said many investors who have been sitting on the sidelines for the past year were now looking for the right opportunities to make their maiden investments into the country.
Bury commented that historically, opportunities for direct real estate investment had often appeared over-priced, limiting the amount of transactional investment activity in the market. “With the current tightening of credit for developers and investors we believe that the next year may present well priced prospects for investors looking to tap into Vietnam’s growth potential,” he noted.
According to CBRE, any pain that the real estate industry is feeling is a consequence of the immaturity of the market and the cycles that are evident in any property market. For those with a medium to long term strategy, Vietnam offers an excellent opportunity over the next 12 months.