Investment viewpoint: Positive signs of real estate sector

The real estate market would look positive in Q421 and in the medium and long term as sales and construction activities were reopened, said KB Securities.

The trend of low-interest rates has promoted the demand for loans to buy houses or invest in real estate. Photo: Quoc Tuan

In 2Q21, the real estate supply recovered slowly due to the COVID-19. In Ho Chi Minh City, the number of apartments for sale rose to 4,000 units, doubling the number of 1Q’s. However, it slowed down from June due to the fourth wave of the COVID-19 pandemic. The absorption rate remained high with 4,700 units sold (76%YoY) thanks to the investors’ multichannel sales and flexible sales policies.

In Hanoi, 3,600 units were launched, down 20% QoQ. The absorption rate is positive when the number of sold units exceeds the number of new launches. Primary prices rose in HCMC (16.5% YoY) and Hanoi (7% YoY).

The complicated COVID-19 developments in 3Q, especially in HCMC, negatively affected not only the construction and launching of the real estate market but also the buyers' income. However, thanks to multichannel sales and buyer support policies, the negative impacts of the pandemic were reduced.

The promotion of public investment has been considered the driver for the real estate sector. Large projects in the Southern region such as Long Thanh Airport, Metro lines, and traffic axes connecting HCMC with neighboring provinces and the planning of the historic inner city and Red River in Hanoi benefit the real estate market in the medium and long term. “The investors owning a land bank in these areas will benefit from infrastructure development and rising prices”, KB Securities said.

Meanwhile, legal bottlenecks have been solved. The amendment of Investment Law 2020 and Construction Law 2020 effective from January 1, 2021, helped shorten the time spent on project licensing. Besides, the housing market supply is gradually recovering, especially in HCMC when many projects delayed in the last two years are showing signs of resuming.

The trend of low-interest rates has promoted the demand for loans to buy houses or invest in real estate. In 2H21, the global and Vietnam interest rates should stay low thanks to accommodative monetary policy and preferential credit packages of banks, facilitating buying and selling activities.

KB Securities evaluated the prospects of the real estate industry to be positive in Q421 and in the medium and long term when sales and construction activities are reopened from 4Q21 (also the peak season of the real estate market) thanks to accelerated vaccination and loosened social distancing. Enterprises with large land banks, safe financial structure, and positive sales progress are good investment choices amid the COVID-19, including Vinhomes (VHM), Khang Dien House (KDH), Nam Long Group (NLG), and Dat Xanh Group (DXG).