2021: Change of Plans!
Tet this year has passed with an experience of joy that is stranger than any other year, when the Covid-19 epidemic still haunts the society and changes the New Year Eve in a more quiet way.
Those holidays finally passed, the pace of returning to work is somewhat faster, when the silence and inertia of Tet this year seems nothing much.
Right! The bustle of returning to work, life, new journeys, unfinished plans of the past year and aspirations will surely make 2021 an explosive year.
The new breeze from the positive of the past year has prompted the US Ambassador in Vietnam, Mr. Daniel Kritenbrink, to release a clip congratulating the New Year’s Eve with a rap song with the support from coach Wowy, from a very successful TV show, Rap Viet.
This is the fourth year Ambassador Kritenbrink celebrates Tet in Vietnam and he always enjoys this holiday of the year.
“Tet gives us the opportunity to slow down, reunite with loved ones and look back on the past year as well as towards the coming new year,” the US Consulate in Ho Chi Minh City told VnExpress about the idea of making video.
US Ambassador in Vietnam, Daniel Kritenbrink, congratulates the New Year’s Eve with a rap song with the support from coach Wowy
The US believes that the two countries have worked closely in everything from security, trade, education to war consequences, energy and health and can now “add music to the list”.
Together with the positive energy breeze to start the new year, Realtique and Mr. Su Ngoc Khuong, the specialist, analyze why 2021 is the best opportunity to invest in Vietnam real estate:
Mr. Su Ngoc Khuong, Senior Director of Savills Vietnam
According to Mr. Su Ngoc Khuong, for assets that generate cash flows, investors should pay attention to financial costs, annual rate of return for the last 6-7 years and capital index when transferring.
In 2021, the real estate market is expected to explode when many new projects will be launched and people’s housing needs are still essential. For the real estate market in general, the housing market in particular is always a bright spot and attracts the attention of investors and customers, and is likely to be a growing segment compared to 2020.
On the other hand, it will be more difficult for the real estate market of offices, commercial centers, serviced apartments and hotels. However, facing these difficulties, businesses have restructured to stabilize costs and profits and have other strategies to defend against more difficult scenarios.
“Instead of pessimism, I advise real estate businesses to see the immediate difficulties as a point to start creating the premise for the future. When investing in buildings, shopping centers, hotels and services, normally the payback period is 10 years, so 1-2 years of difficulty is not too much of a problem, but for investors who use financial leverage, it will be very difficult to maintain. Currently hotels and commercial centers in Vietnam market usually have been operating for 5-7 years, so it has accumulated cash flows”, Khuong shared.
Vietnam’s real estate market with a good prospect in 2021
This expert points out this will be an opportunity for local and foreign investors to participate in the market, because the epidemic will not last long.
Looking back in the past, epidemics could cause enormous damage to all human and material aspects, but only last for about 2-3 years at maximum. The world always has preventive measures such as vaccines to prevent diseases.
Some countries around the world have applied vaccines to prevent epidemics for people. Vietnam also tested a clinical vaccine on 60 people and no symptoms appeared after 72 hours. This is a positive point when Vietnam has controlled the epidemic with its own resources, even when the world is still facing difficulties in disease prevention. Although thorough prevention such as mass vaccination still has difficulty in ensuring adequate numbers of people in Vietnam, but this is still the safest place at the moment.
Regarding the residential real estate segment, according to Khuong, the performance of developers and the launch of new housing projects are still taking place relatively regularly. This can be explained because for groups in Vietnam that have accumulated assets in the form of gold and foreign currencies, the need to convert these assets into real estate forms is always high.
This is also true for investors and organizations around the world, when the economy faces many difficulties, political instability or war, epidemics bring social unrest, affecting all aspects of the world. Socially, they will immediately put their cash flow into a safe haven, including real estate. On the other hand, the more the lack of medium and high projects, the greater the need to invest in land plots, townhouses, villas and apartments.
For individual investors, they still buy townhouses and retailers, this is how they invest money. Thus, for real estate developers, the difficulty here is not the market without demand, but legal procedures. From the above factors, although 2020 is a difficult year, operating real estate businesses and the market in general remained at a stable level.
Regarding monetary issues, in particular the management of commercial interest rates, bank deposits are currently at about 5-6%, but lending rates remain high to avoid speculation. However, businesses can still manage capital in many different ways, this is one of the plus points for the real estate market in Vietnam in 2020.
“By 2021, if the epidemic continues, procedures can still be completed for ongoing projects, for assets that are generating cash flows such as office buildings and shopping centers, there is no need to sell, as investors calculate the current challenges in the market as temporary, within 1-2 years, they can handle their financial problems while holding on to the expectations in 2022, 2023.
“For investors, five-star hotels, commercial centers, grade A buildings in the city center are real estate with steady revenue. Although their profit margin may not be high, only at 6-7% / year, when holding a long time to transfer, the profit will be very large. That is why Vietnam is still an attractive market for foreign investors”, Mr. Khuong emphasized.
Dr. Su Ngoc Khuong also gives advice in business strategies for units participating in the real estate sector to achieve business efficiency in 2021. For real estate businesses, he said that depending on type Real estate model will have different strategies.
For residential real estate businesses, the 2021 goal is to create or possess products, because without products there will be no revenue.
For commercial and office real estate, businesses need to rebalance target customers, balance revenue and costs. When offices are left vacant, revenue balance based on short term and long term can ensure the businesses survive tough times.
As for the individual investment group, depending on the expectation of 1-2 years of profit, in the current context, investors should limit the use of financial leverage.
In addition, according to Khuong, the story of housing real estate is always a story that people are interested in, so legal procedures are something that must always be noted.
Ultimately, the selection of a project that can achieve its goals should be based on factors such as liquidity, value added and risk management.
Source: VnExpress and Cafef
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