A new land policy could to some extent,
rescue property market, yet full recovery could hardly come, said Dr Alan Phan,
Chair of Viasa Fund in Hongkong and Shanghai.
Previous
years saw ample supply of high-end housing in the light of moderate average
income. Secondary investors who used to acquire the majority of property
products have now turned their back to the market resulting in excessive supply
and therefore an inevitable decline in property prices which could probably be
evident by the end of this year.
In the
meantime, mid-end and low-end housing segments have seen expanding demand yet
supply scarcity. Unlike Malaysia where 100-square-metre apartments worth of
around 500 million dong each are popular, surging costs of construction, land
and other related expenses have made such price infeasible in Vietnam. Average
property price in Vietnam is estimated to 25 times as much as income whereas
the respective figure is 6.3 in Thailand and 5.2 in Singapore.
Should
the land law allowing foreign house ownership be available, demand could partly
be stirred, which may then attract a great deal of capital into real estate
sector.
The
government itself would wish to boost up demand in the property and stock
market so as to somehow ease burdens on commercial banks.
Yet,
promulgating a new land law would not be an easy task as much loosening could
result in the return of an overheating market that is beyond control. Moreover,
this large market has been under the governance of a range of ministries,
branches and agencies, making the issuance even more complicated.
Regarding
commercial banks' recent interest rate reduction, this indicates the
government's remarkable efforts to stimulate demand for property market, said
Alan Phan.
This
movement could, to some extent, hit the market, yet the impacts could be
negligible since money shortage has made daily essential needs and businesses'
survival a more important task than investment in property.
"Investment
in property for the time being may not be a wise decision due to the
significant difference between real prices and market prices.
Property
price is very likely to drop further in the near future. Purchasing property
items to hoard in 20 years' time rather than immediate selling within three and
five years to come could guarantee some profit", said Alan.
World
experience has revealed that it would take some seven and eight years for a new
property market cycle to come. The domestic market has faced up to various
difficulties for the past few years. Yet, it is crucial that the market hits
the bottom before picking up again.
Apparently,
real estate investors and speculators have yet got over bitter experience in
the recent years to return to the market for the time being, he added.
Dr Alan
Phan has been doing business for over 43 years in the US and China and is
presently chair of Viasa Investment Fund in Hongkong and Shanghai. Studying
abroad in the US since 1963, he has worked for many multinational companies and
established his own business, Hartcourt Company which is listed on the US's
stock exchange with value market of more than US$700 million. Also, he has
published a range of books on economic and financial matters at emerging
economies.
VietBiz24
Business & Investment Opportunities
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