Residential segment sees little impact amid Covid-19 pandemic
The Saigon Times
|High-rise apartment buildings in HCMC – PHOTO: VNA|
HCMC – As Vietnam is experiencing the third wave of the Covid-19 pandemic, which continues to impact the hospitality industry and various real estate sectors, prices of the residential segment appear to have remained unchanged and sales unaffected.
David Jackson, chief executive officer of Colliers International in Vietnam, said the hospitality industry would be the most impacted, evident by hotels, tours and flight cancellations by domestic tourists and the limited number of international arrivals into Vietnam.
However, the Covid-19 pandemic did not significantly impact the prices of residential properties in 2020, despite all condominium segments and landed properties having seen their prices increase from 2019.
Sales remained robust, with agents and buyers taking to social media to interact, instead of the previous face-to-face interaction.
Buyers are looking at the long-term picture after the Covid-19 pandemic and Vietnam’s infrastructure development and economic growth can help boost property prices.
Jackson projected that if the pandemic continues, it may result in delays in construction or new launches as developers have to grapple with social distancing measures. They may face financial constraints or be forced to wait for a more suitable time to launch their projects.
Talking about changes for investors during the “new normal” situation, Jackson said social distancing is prevalent and more interactions happen online, with developers and investors using social media to transact.
In this aspect, if the investors are tech savvy and manage to understand the projects through online interaction, it can offer even more opportunities for speculators to profit.
Those who speculate need to be careful during this “new normal”. Projects that are newly launched are more challenging to flip than projects that are near completion.
Investors will need to have enough capital to pay installments if they cannot find another buyer. Future buyers that they plan to sell to may be more conservative with their cash reserves and other residential projects to choose from.
In 2021, home loan interest rates are expected to continue decreasing and policies become more attractive since many commercial banks have excess cash flow. This presents an opportunity for investors to use their financial leverage to enable them to purchase properties.
That said, investors should only take loans if they have a stable financial situation during this economic downturn and not overstretch their financial commitments. They must be sure that taking a home loan to purchase a property is in line with their overall investment strategy.
Jackson said during this time, investors should consider their own cash flow and financial situation. Real estate is not as liquid an investment as bonds and stocks, so buyers with cash flow needs should not jump into real estate even if it seems promising.
Besides, they have to understand the project they are planning to buy. Covid-19 may delay the construction progress. They have to see that the developer has all the important legal documents needed for the project and that they are satisfied with the project’s location, facilities and price.