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Việt Nam’s real estate market attracts foreign investors in all segments. — VNA/VNS Photo |
HCM CITY — Việt Nam’s property market is attractive for foreign investors, according to experts.
The attraction is not just in terms of certain locations and segments but across the board.
Nguyễn Trọng Toàn, investment manager at property consultancy Savills’s Hanoi office, said every segment has its own charm for foreign investors.
In the residential segment, they are seeking investment opportunities and developing projects under their own brands amid scarce supply and high demand for housing, he said.
They leverage their advantages in branding, design and construction standards and quality, he said.
In the office segment, the market is seeing growing demand from energy, manufacturing and consulting businesses, which is keeping occupancy rates steady.
In major cities like Hà Nội, Đà Nẵng and HCM City, the segment offers increasing opportunities for foreign investors to position their products to meet green standards such as LEED, WELL and BREEAM certification.
In the Hà Nội property market, Toàn said foreign investors are not focusing just on central districts but are also looking elsewhere.
This is also a move to capture the shift by private offices and the development of urban transportation infrastructure, he said.
In the retail sector, the entry of retail giants underlines the prominence and attractiveness of the country.
In February Central Pattana, a retail powerhouse under Thailand’s leading retail conglomerate Central Group, prepared to establish a legal entity in Việt Nam to enter the vibrant market.
Earlier, after opening its third Emart hypermarket in HCM City, THISO (a subsidiary of THACO) unveiled plans to expand in the north with a fourth by acquiring a 2.4-hectare land plot in the Tây Hồ Tây Urban Area in Hà Nội City.
The hotel segment is also showing signs of recovery.
According to Savills Việt Nam’s Market Report, hotel occupancy rates and tariffs have increased in Hà Nội City and HCM City.
Last year, occupancy rates increased by 21 per cent in Hà Nội City annually and 18 per cent in HCM City.
Foreign investors are more open to various forms of investment to maximise the potential of the market, Toàn said.
After researching the market well, many foreign investors are also considering investment opportunities outside major cities. — VNS
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High-rise ready-built factory in the Long Hậu Industrial Park in Long An Province. The industrial real estate segment is expected to remain a “shining light” in Việt Nam. — Photo courtesy of longhau.com.vn |
HCM CITY — The industrial real estate segment is expected to remain a “shining light” in terms of investment volumes, development of quality ready-built facilities and strong price performance, according to property consultancy Knight Frank Vietnam.
Alex Crane, the company’s managing director, said supply in the ready-built leasing segment has tripled since 2016.
It was admittedly from a non-existent base, as he explained.
“Investors had to build their own facilities [before 2016]. The maturing of the development market now means ready-built inventory is set to increase 65 per cent in the next three years, which is a tremendous amount and this is encouraging for growth of existing occupiers and new-to-market entrants.
“With this amount of space, we will see rents at stable, affordable levels which will be very encouraging for occupiers.”
Speaking at a Canadian Chamber of Commerce event held recently in HCM City, Crane also highlighted the significance of Decree No 08/2023/ND-CP, which allows bond issuers to extend their maturities.
However, he cautioned that many issuances utilising Decree 08 will now fall due this year alongside those issued in 2021, which would result in many developers feeling similar pressure from the capital market as in the last two years.
While interest rates have stabilised, access to credit for developers remains relatively high, he said, adding that his company believes as a result there would be a natural slowdown in supply, which could soften price reductions through the remainder of the year.
He said the forecast for new apartment launches in 2024 has been reduced by over 50 per cent from the earlier one in 2023 as a result of developers reviewing their timelines and pushing many of these developments into 2025 and 2026.
He said apartment prices in HCM City and Hà Nội were converging, and attributed it to Hà Nội’s more rational market behaviour over the last few years, less speculation and more genuine demand.
While optimistic about Việt Nam’s overall property market in terms of net demand, he cautioned about the country’s growing comparative expense to regional peers. He cited examples of large manufacturers opting for other countries based on cost considerations, pointing to the need for Việt Nam to incentivise the best manufacturers to invest in the country, particularly given the global minimum tax is now applicable in Việt Nam, removing some tax incentives for large players.
Referring to regulatory changes, he welcomed delays in discussions about imposing additional taxes on a second property while the residential market finds a new market-led norm.
He also expressed optimism about the amendments to the Land Law, viewing it as a positive step for the market in the long term. — VNS
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By Matthieu Cany, Co-founder, Sextant Properties
First established in 1896 and 1960, respectively, the Olympics and Paralympics are not only global sporting spectacles but highly sought-after events that many cities are eager to host and on which investors keep a close eye. After multiple withdrawals that left only Paris and Los Angeles in contention, the French capital celebrated in September 2017 when it was awarded the 2024 Summer Olympics by the International Olympic Committee (IOC). Having previously hosted in 1900 and 1924, Paris will become the second city, after London, to host the Summer Olympics thrice.
The 2024 Summer Games are scheduled to be held from July 26 to August 11, but savvy investors’ interest in the Paris property market was piqued as soon as the city was announced as the host. To understand why, we should briefly examine the Olympics’ impacts on the previous European Summer Olympics host city: London.
The 2012 Olympics and the London property market
It doesn’t seem long ago that London opened its doors to commence the 2012 Olympics, welcoming more than 10,000 athletes from across the world. It was watched by an estimated worldwide television audience of 900 million, making it the most-viewed Olympic opening ceremony in the United Kingdom and the United States. Almost 11 million tickets were sold, of which 8.2 million were for the Olympics and 2.8 million for the Paralympics.
According to the GOV.UK website, the 2012 Summer Olympics in London cost £8.77 billion, three times the original budget of £2.4 billion, but resulted in the UK economy seeing a trade and industry boost in excess of £14 billion. Besides the return on investment, the legacy that any Olympic event leaves behind is particularly interesting to property investors, as host cities tend to transform the Olympic and Paralympic Village and its surroundings into residential, commercial or mixed-use opportunities.
For example, East London—where the event was held across the five boroughs of Barking and Dagenham, Hackney, Newham, Tower Hamlets and Waltham Forest—and the Royal Borough of Greenwich witnessed noticeable increases in popularity among property buyers, as the areas were set to boast an array of new properties. Property prices steadily increased, meaning investors who bought into the areas early enough benefited from their portfolios’ healthy growth. According to data from real-estate platform Rightmove and the Office for National Statistics (ONS), some properties in East London saw values balloon from under £200,000 to above £400,000, whilst the average property price in Stratford in the Borough of Newham, the Olympic Games’ epicentre, rose from £209,000 to more than £500,000.
A press release published by Lloyds Banking Group in 2022, reflecting on the Olympic Games’ impacts in London 10 years later, confirmed the drastic increases in property values. Jayne Jones, mortgage and protection director, Lloyds Bank, commented, “Whether it is solely the impact of the investment ahead of the Olympics or a combination of other factors, such as the relative affordability of property, house prices in the East of London have outperformed the rest of the Capital by some way since 2012. Homerton, to the west of the Olympic Park, is the postal district in East London that has seen house prices perform best since the 2012 Olympics, rising 210% to £682,585. This is double the average across East London, and more than three times that of London as a whole. Waltham Forest (122%), Newham (98%), and Hackney (98%) have all outperformed their neighbouring boroughs, Greater London (61%), and England & Wales (47%) since the Olympics when it comes to house prices. Transforming a derelict industrial estate into the Queen Elizabeth Olympic Park, together with the wider regeneration in the area, has attracted investment from retail, leisure, industry, the arts, and education, and has generated thousands of jobs.”
What could this mean for the Paris property market?
Property investors have hoped Paris 2024 would hold the same investment potential as London 2012, and many rushed to purchase properties as soon as Paris was announced in 2017 as the host city. Yet, it is not too late to still benefit financially, as a range of Olympic-related infrastructural investments are underway that are expected to add further growth potential to local property prices.
The Olympic and Paralympic Village is under construction and will be handed over in March. According to the International Olympic Committee, infrastructural investments are focused on numerous key areas. These include the centre of Paris but stretch as far as seven kilometres north into the communes of Saint-Denis, LÎle-Saint-Denis and Saint-Ouen-sur-Seine, where the Olympic Village will be located. The Media Village will find a home in Dugny, Le Bourget and La Courneuve, introducing 4,500 new housing units.
Already, this has driven investment appeal in these areas but will continue post-Olympics due to ongoing infrastructural upgrades, such as the Grand Paris Express project, a major extension of the city’s transport system. As part of the Grand Paris Express project, Saint-Denis will feature a brand-new Paris Métro station scheduled to open in 2024. The station will be built over nine levels and accommodate 250,000 passengers daily. The Grand Paris Express is Europe’s largest transport infrastructure project and the fourth largest on the planet, with an estimated cost of €38 billion. Overall, the project comprises four new lines in addition to extensions of some of the existing lines. Two hundred kilometres of new tracks and 68 new stations will be created, serving more than two million passengers daily. Due to the size of the project, stations will open in stages, with the final ones opening in 2030.
Historically, Saint-Denis has been known as one of the more affordable Paris suburban communes, where the price per square metre was around the €2,000 mark. According to data from property portal Properstar, square-metre prices in Saint-Denis fluctuate around the €4,700 mark, whilst rents range anywhere from €700 per month for a one-bedroom apartment to €3,000 a month for a two-bedroom apartment. Still, there is potential for prices and rents to continue to rise, particularly after the Olympics, once the remainder of the developments are marketed.
What will happen after the Olympics?
In November 2024, once the Olympic Games have closed, the operators will begin a reversibility phase whereby a new, eco-responsible, functional neighbourhood will be created that will blend into the city of the future and contribute to the community from 2025 onwards. The neighbourhood will cover 52 hectares to benefit 6,000 residents and feature:
- More than 2,800 new housing units (2,000 family homes, 800 residence units);
- Student housing;
- Hotel;
- New schools;
- Six hectares of green spaces, including a public park in the centre of the neighbourhood;
- Planted areas for pedestrians and non-motorised vehicles;
- One hundred and twenty thousand square metres of offices, other business premises and services for 6,000 employees;
- Three thousand and two hundred square metres of neighbourhood shops.
Which areas should buyers and investors consider?
Although property prices in and around the Olympic and Paralympic Village have already seen uplifts in value, ongoing infrastructural investments will widen the areas with investment potential. We advise clients to consider not only Saint-Denis and the surrounding neighbourhoods but also the various parts of the city that will directly benefit from the Grand Paris Express network. History has taught us one thing: Buyers and tenants will always want to live near transport links.
ABOUT THE AUTHOR
Matthieu Cany is a Co-founder of Sextant Properties. As a member of Premier Syndicat français de l’immobilier (SNPI), the first French property syndicate in France, Sextant prides itself on its customer service, providing smooth buying and selling experiences for its clients.
Bold interior trends, falling borrowing costs and new opportunities for first-time buyers will bring colour and life back into the property market in 2024.
A bleak 2023 saw the market’s pulse all but stop, as would-be buyers put their plans on hold to wait out the turmoil.
House prices tumbled, affordability was stretched to the limit, the number of first-time buyers fell to a ten-year low and mortgage rates reached dizzying heights.
Experts now say the worst is over, with mortgage rates continuing to drop and sellers finally able to take advantage of falling house prices.
As the housing market shifts into a new gear, we highlight the property trends that will dominate 2024 — and what you need to watch out for…
Wait until Spring to buy
The general election — it must be called by December 17 — could stall the property market at the beginning of the year, as prospective buyers await policy pledges.
Robin Thomas, of buying agents Recoco Property Search, says there is ‘always’ a slowdown in the number of property transactions in the run-up to a general election.
‘I have worked in property since 1978 and have been involved in property transactions during the past 11 general elections,’ he says. ‘However, how far in advance of a general election this starts to impact the property market varies considerably.’
And the outcome of the poll will also have a huge effect on the housing market, he says.
There has been talk of a spring election in May after Rishi Sunak announced the Budget would be delivered on March 6 — the earliest date in 13 years apart from in the pandemic. But the Prime Minister may wait until the autumn in the hope the economy improves.
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Nick Leeming, chairman of Jackson-Stops estate agents, says: ‘The possibility of a general election as early as May 2024 could cause buyers to pause and hold off a long-term commitment until they know the impact and the chance of changes to housing policy.’
Estate agent Savills has also predicted a stall in sales at the start of the year, which could delay a recovery in house prices until 2025.
The Conservatives last week announced plans to cut costs for first-time buyers in a bid to win over younger voters ahead of an election. Housing Secretary Michael Gove said the Government would ‘definitely’ have plans in place for prospective homeowners before we head to the polls.
First-time buyers stage comeback
The number of first-time buyers who bought a home with a mortgage fell to a ten-year low in 2023, according to the Yorkshire Building Society.
Would-be buyers have been forced to put their plans on hold — soaring mortgage rates, high inflation and record increases in rent have made it harder than ever to scrape together a large enough deposit, unless they have financial help from loved ones.
Housing affordability has been further stretched for first-time buyers as they are typically subject to stricter stress tests — where lenders work out how much they can afford to borrow based on their finances and possible future interest rate changes — when they attempt to take out a mortgage.
But Lewis Shaw, mortgage expert at Shaw Financial Services, says falling inflation and interest rates could ease the cost of borrowing, opening up buying opportunities that didn’t exist in 2023.
‘First-time buyers have a great chance in 2024 to take a step on to the ladder without the competition they’ve faced from landlords over the past decade.’
This is because dramatic increases in buy-to-let mortgage rates forced many landlords to sell up last year. The Conservatives are expected to promise to cut the upfront cost of a home for first-time buyers as a pre-election giveaway in a last-ditch bid to win over younger voters. This could deliver another boost for renters looking to get their first home.
An end to the London exodus
The number of Londoners leaving the capital to move elsewhere in Britain dropped significantly in 2023 after two years of near-record levels of residents heading out, according to Hamptons estate agents.
The London Borough of Richmond-upon-Thames has been voted the happiest place to live in Britain — the first time it has topped the ‘happy at home’ poll conducted by Rightmove — which asked more than 26,000 people how they feel about where they live.
North London estate agent Jeremy Leaf says the race for space has reversed to some extent as workers now go to the office a couple of days a week. This eases the pressure on families needing to leave London for bigger homes with work spaces.
‘This is likely to continue into 2024. Before and during the pandemic, it was one or the other; now, it is still important for property buyers to work from home but perhaps not as much as immediately post-pandemic,’ he says.
Embrace bold colours… maybe
Vibrant shades will be ‘all the rage’ for homeowners in 2024. Drawing inspiration from the playful ‘Barbiecore’ aesthetic, jovial colours such as bubblegum pink and bright turquoise are set to be key interior design trends this year, according to Decorilla, an interior design service.
It says: ‘These bold and vivacious shades inject an unapologetic sense of fun and energy into interiors, creating spaces that radiate positivity. Monotone furniture and decor are outdated because they lack personality and vibrancy.’
But Michael Burkmar, of Hampshire-based estate agents Burkmars, warns it has ‘always been the case’ that homes with neutral colours are easier to sell.
‘From a marketing perspective, a house with turquoise walls will stand out more but it doesn’t make it any easier to sell. Cream or white walls generally make a place look bigger, while bold colours can be a bit oppressive.’
Marco Helliwell, founder of property advice website myproperty advice.com, has previously said bright exteriors, such as a house with a pink facia, can add up to £20,000 to the value of a property because it typically sparks quick interest from buyers and can lead to a bidding war.
Bungalows are hot buys
Bungalows are surging in popularity among young families — as first-time buyers look for cheaper ways to get on the ladder.
Leah Scarborough, an estate agent at Haart in Essex, says bungalows are being snapped up within weeks and sell far faster than other homes, on average.
‘They are very popular and go so quickly because of the scope they offer. They tend to have bigger gardens and a lot of potential for renovation. Bungalows in need of a little bit of work are being bought by buyers aged 25 to 30,’ she says.
Room sizes in bungalows are usually larger than in new-builds and big plot sizes make them ideal for expansion and growing families. Almost half of bungalows have two bedrooms. But only one in five has more than three, according to the Valuation Office Agency.
Most bungalows are also freehold, meaning buyers own the house and land it’s on outright.
In comparison, most flats are leasehold, meaning buyers do not own the land their property occupies and are at the mercy of the freeholder if there are problems with the building itself.
Wood panelling is back
Panelling has become one of the hottest trends in interior design, shooting up in popularity on social media.
Videos with the hashtag ‘panelling’ have amassed 284 million views worldwide on social media application TikTok.
Wood panelling wallpaper took off in 2023, with Laura Ashley and John Lewis selling fake wood-effect wallpaper.
But carpenter Kai Cassidy, from Maidstone in Kent, says this trend is shifting up a gear into actual wood-effect panelling.
He says it is a great way to brighten a room and is increasingly popular. ‘It’s not just grand old properties asking for these,’ he says. ‘
One of my clients lives in a 1980s house and the panelling looks great in her living room.
‘It takes about four hours to do and costs around £350 with material costs on top.’
Split your home in two
Homeowners could soon be able to convert houses into two flats without planning permission, under new Government plans to slash red tape.
The proposals, announced by Chancellor Jeremy Hunt in his Autumn Statement, could trigger a wave of conversions in 2024.
The new rule, known as a ‘permitted development right’, would apply so long as the external appearance of the building does not change. The Government said it wants to implement the change in 2024 after consulting industry experts.
Ranald Mitchell, of mortgage adviser Charwin Private Clients, says: ‘Many landlords will jump at the chance to use this relaxation in the rules. They are looking at any possibility to improve their yield and are sitting on properties prime for carving up.’
The rule change could also come in handy for multi-generational living, with families dividing up their home so that elderly relatives can move in, Mr Mitchell adds.
You could escape to the chateau…
Dreams of buying a second home in France could soon be back on the table, thanks to a forthcoming change in immigration rules.
Since Brexit, British visitors can spend just 90 in every 180 days in the Schengen Area — almost all the European Union, plus Switzerland, Norway and Iceland.
This derailed many plans to buy a second home in Europe for those who planned to spend much of their retirement abroad.
Currently, the only way second homeowners can stay in France for more than 90 days is to apply for a long-stay visa each year, but acquiring one has been criticised as complicated and expensive.
A rule change approved by the French parliament a fortnight ago has scrapped the limit, extending how long you can spend in France without a visa to six months for British second homeowners.
France’s constitutional council still needs to rubber-stamp the change. However, it would make it far easier for those who buy a home in France to enjoy the property.
Cash will be king
Wealthy buyers who can secure their new home with cash will do so in 2024, even if it means moving into a smaller or less central property because they won’t be at the mercy of mortgage rates, according to estate agent, Jeremy Leaf.
He says: ‘People want to be cash buyers rather than rely on mortgages, even if that means moving further out of town in search of cheaper properties.
‘Many buyers had their fingers burned in 2023, knowing that property values can be reduced if they are relying on a mortgage, and the lender’s surveyor, to assess the value of a potential property.
‘Or they have found that criteria has been too tight to get the mortgage they need. Cash brings better bargaining power and gives buyers the advantage.’
j.beard@dailymail.co.uk
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