A great chance to invest in commercial property
Recent lending restrictions, investor outflow from corporate bonds, and increasing interest rates have made the residential real estate market less liquid. However, the commercial real estate market is still seen as having substantial growth potential.
According to a recent analysis by Cushman & Wakefield Vietnam, Vietnam's commercial real estate sector is still fairly young and mostly centred on Ho Chi Minh City and Hanoi. Vietnam ranks 15th in the world in terms of population (with almost 100 million people), and its urbanisation rate exceeds 40 per cent. Along with this, every year, a large number of migrants – particularly young people – arrive in major cities.
Vietnam's commercial property sector offers a great deal of promise since supply is restricted and demand is rising rapidly |
Meanwhile, only roughly 820,000 square metres of Class A office space is available in Ho Chi Minh City and Hanoi combined. This is much less than regional office markets such as Tokyo (about 10 million sq.m), Seoul (4.3 million sq.m), and Singapore (2.6 million sq.m).
Trang Bui, general manager of Cushman & Wakefield Vietnam said, "We can certainly see the increase in commercial demand from the new generation as they reach the age where they want to rent. They are willing to spend more money on enhancing their own experiences, including shopping, travel, healthcare, education, and supplementary services.
"All human needs, from the most fundamental to the most complex, must be met by real estate. We anticipate that Vietnam's investment in commercial property might reach tens of billions of dollars in order to meet the demands of the metropolis."
A total of 68 per cent of poll respondents from the Batdongsan website who were questioned about their plan to purchase real estate within the next year stated they would. The larger a consumer's real estate holdings, the greater their desire to purchase additional homes and land. Some 46 per cent of those who do not own any properties want to purchase real estate in 2023, compared with 79 per cent of those with two properties and up to 87 per cent of those with three or more homes.
Currently, several investors are concerned with choosing the optimal timing to invest in commercial properties.
Tran Khanh Quang, general director of Viet An Hoa Real Estate Investment, said that when investors observe the market rising, they fear missing out on possibilities and are thus compelled to participate. When the market declines and investors realise the future is bleak, they seek to protect their assets and sell as quickly as possible, resulting in a market decline.
According to Quang, if investors want to reduce risk, they should follow the market movement more closely until the second quarter of 2023. However, according to this expert, investors should not be timid if they have access to capital.
"Once you've determined the thing you want to purchase, spend around two weeks observing. In addition to evaluating the price level in the region, focus on the product's discount. If you see a price adjustment of 3 to 7 per cent during this period, it is probable that the investor has a pressing need to sell the commodities immediately. Investors should choose items about which they have prior knowledge in order to bargain and acquire them at a reasonable price. Before making a judgement, investors should also investigate the legitimacy of the goods," Quang said.
According to Trang, now is the optimal moment since most commercial properties have a finite lifespan regardless of how well they are maintained. When an asset's useful life expires, its value drops and it becomes outdated.
For instance, an outdated office building may not have a high-speed Internet connection or modern smart gadgets, so tech businesses and many other tenants will not choose to establish offices in these antiquated buildings, even if their locations are ideal.
In addition, in contrast to new urban development projects in other nations, the absence of preferential policies is one of the greatest hurdles to the growth of commercial real estate in Vietnam. Investors want additional assistance with legal and tax difficulties.
"Creating a more favourable and transparent business climate would function as a catalyst to speed up the growth of commercial real estate in Vietnam," Trang added.
See also
Property market starts new recovery “cycle”
08:22 | 26/09/2024 Property
Decree facilitates social housing development
15:06 | 13/08/2024 Property
Digitization of land administration a necessity: Deputy PM
09:39 | 24/06/2024 Property
Vietnam resort properties attractive to foreign investors
07:30 | 27/05/2024 Society
The OpusK by SonKim Land Triumphs at Vietnam Property Awards 2023
10:29 | 14/11/2023 Property
BCI Central celebrates the best in Vietnam architecture, building and design industry
07:05 | 28/05/2023 Property
See more news
M&A to pick up in property market
07:00 | 19/05/2023 Property
More than a million low-income homes to be built by 2030
07:00 | 07/04/2023 Property
Strong signals of positive year for industrial real estate market
10:25 | 27/03/2023 Property
Credit crunch burdens real estate market
06:00 | 03/03/2023 Finance-Banking
Hunting for real estate investment opportunities after Tet
09:32 | 03/02/2023 Property
Industrial real estate market recovers strongly
06:00 | 06/08/2022 Property
Banks tightening real estate credit to limit risks
06:00 | 06/05/2022 Economy
Bright prospects for Vietnam’s industrial real estate market
06:00 | 19/03/2022 Property
Vietnam, an ideal destination for real estate investors
06:00 | 28/01/2022 Property
Bac Ninh: 28 additional 4-star-rated OCOP products
23:24 | 22/12/2024 Society
PM attends inauguration of resettlement areas of Lao Cai’s typhoon-affected villages
18:52 | 22/12/2024 News and Events
Defence cooperation forms pillar of Vietnam-Thailand enhanced strategic partnership
18:39 | 22/12/2024 Cooperation
Contracts worth 286.3 million USD inked at Vietnam Int’l Defence Expo 2024
17:02 | 22/12/2024 Science - Technology
Vietnam needs development of green products exported to UK
16:58 | 22/12/2024 Trade
Multimedia
Glorious tradition of the Vietnam People's Army
08:30 | 22/12/2024 Infographic
Total FDI registered in Vietnam hits 31.4 billion USD in January-November
09:02 | 17/12/2024 Infographic
First 11 months of 2024: Import-export turnover increases 15.4%
10:55 | 16/12/2024 Infographic
11-month agro-forestry-fishery exports exceed yearly target
19:55 | 15/12/2024 Infographic
Hanoi achieves or exceeds 23/24 socio-economic targets for 2024
08:57 | 13/12/2024 Infographic
Gov't targets to gradually make English second language at schools by 2030
15:45 | 21/12/2024 Policy
Nine newly-adopted laws made public
16:42 | 20/12/2024 Policy
Resolution on construction of North-South high-speed railway issued
11:42 | 19/12/2024 Policy
PM requests no one be left behind in apparatus restructuring
09:16 | 18/12/2024 Policy
Ministry proposes incentives for renewable energy projects
16:17 | 20/12/2024 Energy
The Era of Advancement for Vietnam Industrial Park
17:15 | 19/12/2024 Industry
Vietnamese coffee sector working to meet EU Deforestation Regulation
16:38 | 18/12/2024 Industry
Construction industry expands at the highest rate since 2020: ministry
09:38 | 18/12/2024 Industry
Nghe An Southeast Economic Zone aims to attract 1 billion USD in FDI in 2025
12:33 | 21/12/2024 Investment
Boeing aims to expand investment and cooperation in Vietnam’s defense sector
17:00 | 19/12/2024 Investment
Can Tho attracts non-state investment
10:21 | 17/12/2024 Investment
FDI remains vital contributor to boost economic growth
09:06 | 13/12/2024 Investment
Year-end surge in property bond issuance amid financial challenges
09:39 | 20/12/2024 Finance-Banking
Vietcombank named most valuable brand in Vietnam
16:43 | 18/12/2024 Finance-Banking
Many banks increase deposit interest rates in year-end period
16:56 | 16/12/2024 Finance-Banking
Deputy PM urges extra efforts to remove Vietnam from money laundering grey list
15:16 | 13/12/2024 Finance-Banking
Vietnam likely to face continued turbulent weather systems in 2025
14:26 | 19/12/2024 Environment
Nature-based projects help Mekong Delta fight climate change
16:31 | 18/12/2024 Environment
11 rare monkeys released back into wild in Nghe An
09:27 | 18/12/2024 Environment
Master Plan on Sustainable Exploitation and Use of Coastal Resources announced
11:26 | 16/12/2024 Environment
Contracts worth 286.3 million USD inked at Vietnam Int’l Defence Expo 2024
17:02 | 22/12/2024 Science - Technology
Vietnam can partner with UK in developing nuclear power: Expert
12:43 | 21/12/2024 Science - Technology
Vinaphone launches fastest 5G service in Vietnam
12:38 | 21/12/2024 Science - Technology
Vietnam cooperates with Google to launch “Official Government Apps" feature
17:13 | 20/12/2024 Science - Technology
Bac Ninh: 28 additional 4-star-rated OCOP products
23:24 | 22/12/2024 Society
HCM City’s first metro line launched after years of delay
16:47 | 22/12/2024 Society
Aviation sector strengthens smuggling, commercial fraud and counterfeit goods control
09:49 | 22/12/2024 Society
How will green transformation roadmap for Ho Chi Minh City public transport be applied?
12:19 | 21/12/2024 Society
Viettel's hi-tech products meets standards for supply to Malaysia
13:19 | 21/12/2024 Vietnamese Brands
Hanoi promotes key industrial products
12:57 | 15/12/2024 Vietnamese Brands
Building a strong brand for Ha Giang’s thick-skinned orange
14:31 | 12/12/2024 Vietnamese Brands
2024 Vietnam Business Day opens shop in Japan
14:49 | 04/12/2024 Vietnamese Brands
Vietnam’s high-end fashion targets Chinese market
10:04 | 22/12/2024 Culture
Enduring tradition of Ha Nhi ethnic minority group's costumes
13:14 | 21/12/2024 Culture
Legendary band Boney M to thrill Vietnamese audiences this Christmas
14:49 | 17/12/2024 Culture
Ten prominent cultural, sports, tourism events in 2024 announced
14:39 | 17/12/2024 Culture
Two VNese destinations among cheapest places to live for digital nomads
13:10 | 21/12/2024 Tourism
Vietnam among top 3 destinations appealing to Australians
14:34 | 17/12/2024 Tourism
Ha Long Bay celebrates 30 years as a world heritage site
15:16 | 16/12/2024 Tourism
“Biet dong Sai Gon - Legendary Tunnels" tour launched
15:10 | 16/12/2024 Tourism