The 5 trends that will shape Vietnam real estate in 2019

Vietnam real estate race is becoming hotter than ever with the growing attention of many domestic and foreign investors, recording a record amount of investment in recent years.

The economy is expected to grow well, with a GDP growth target of 6.6-6.8%, CPI lower than the target of 5%. The monetary policy is expected to remain neutral to support growth; JLL observed that hundreds of millions of US dollars of FDI inflows are ready to be poured into Vietnam’s real estate market. The tourism industry saw a record of 15.5 million international visitors and 80 million domestic tourists in 2018 and aims to receive 20 million visitors by 2020. CPTPP & EU Trade Agreements together with other FTAs will help balance the negative effects that may arise from the US-China trade war.

In addition, Vietnam also focuses on investment in infrastructure including 2,000km of new highways, subway systems in Hanoi and Ho Chi Minh City, and many airport expansion and construction projects. other new.

It is therefore not surprising that investors and real estate developers are ready to commit to this high-growth market. Below are the main trends that will shape Vietnam’s real estate market in the following years:

1. Mid-end and affordable segment to dominate property market

According to JLL, the total supply of completed apartments in Ho Chi Minh City reached 160,000 units in all segments, corresponding to the rate of 17 apartments / 1,000 people. “If this rate is high, we should invest in high-end apartments, but if we are low, we should focus on the mass housing market, this is the segment with real demand for apartments”, according to Mr. Stephen Wyatt, General Director of JLL Vietnam.

At the same time, there is an increase in small and ultra-small apartments. About 10 years ago, high-rise apartment projects of 2-bedroom apartments were about 120 square meters, now there is no two-room apartment that is over 100 square meters. The desired apartment size for both buyers and developers has changed. Mr. Wyatt said, “Most first-time homebuyers are only able to afford larger apartments in apartment blocks far from the city center. But psychologically, young buyers want to live in a convenient place, so they still want to buy small apartments with full amenities and community connections. “

2. Flexible workspaces 

Flexible workspaces are becoming more and more popular in Vietnam, largely due to the limited supply of traditional offices in sought-after locations. The country currently has 25 high-end flexible space operators, some prominent units including Toong, Dreamplex, Circo, Workyos, Kloud, CEO Suites, UP and WeWork specials opened their first headquarters in January. 12/2018.

Vietnam ‘s flexible space market is still in its infancy although the first service office – Regus, has been operating since 1999. Flexible space is often considered the answer to the lesson. Economic math of companies compared to traditional office types due to reduced costs from sharing space and facilities.

In the beginning, demand mainly came from startups who wanted to rent short-term offices as well as businesses seeking temporary office locations. Currently, coworking operating units are focusing on finding and approaching business tenants who need to transfer and renovate their offices into coworking models through temporary services called tailoring offices. For this type of service, the operating units will search for premises, design and manage flexible workspaces according to each customer’s specific requirements. This is considered to be the trend that will bring more sustainable development for this kind of flexible working space when the market is growing more mature.

3. Technology companies will drive office occupancy

With the strong growth of e-commerce in Vietnam, JLL predicts technology companies will continue to hunt for ideal office buildings and quickly become the main tenant group, and this is the opportunity for investors who can build offices in time to keep up with demand.

10 years ago, Google’s office in Singapore had 25 employees and today, Google has 1,000 employees here. In 2018, Ho Chi Minh City also recorded a famous deal of an e-commerce giant who rented an office of 10,000 sqm in Saigon golden area. “This is the largest office rental transaction in the last 10 years in the office rental market in Ho Chi Minh City with JLL as the consulting agency.”

Through observation of JLL, the prerequisite factors that technology companies have is the office location must be able to attract talent, is supported by the government, has a convenient traffic with live-work-play facilities integrated into the surrounding environment.

Technology companies are constantly looking for high-quality office space to attract talent, therefore, investors in Vietnam need to consider these needs.

4. Logistics industry growing for e-commerce

In Vietnam, along with the continuous growth of smartphones and 4G network coverage, revenue from online shopping activities continues to increase. Accordingly, there is increasing pressure on logistics systems, supply chains, distribution, and retail channels, as well as factory/warehouse systems.

Logistics is an indispensable part of the successful development of the e-commerce market. Many foreign logistics and e-commerce service providers are working hard to not miss the opportunity to penetrate the Vietnamese market. The establishment of BW Industry Development Joint Stock Company in Vietnam, a joint venture between Warburg Pincus Global Investment Fund and Becamex IDC in January 2018 can be taken as a sign for the great potential sign of this market.

Compared to other countries in the region, Vietnam’s logistics market is still in its infancy, the market mainly provides low-tech products, developed in remote areas. With the development potential of the e-commerce industry and the manufacturing sector, Vietnam logistics market is expected to take a new step in the development process, similar to the process that other markets in the area have gone through.

5. Hotel lifestyle

Millennials generation likes to live in different kinds of space than the generation of their parents and grandparents. This is a generation that grows up with technology, social media, and a globalization economy. They are highly adaptable and are always willing to share facilities with each other. And so it is not surprising that hotel lifestyle – a modern hotel model with increasing exposure with nature is increasing.

The demand for hotel lifestyle is similar to the popularity of co-working – a dynamic generation of young people requiring flexibility, openness, and cooperation. Millennials, a generation of people born between 1980 and 2000, has no gap between work and play. They are not shy of constant business trips, frequent travel or multiple work locations. More than anything else, they are always looking for the experience of being part of a community.

With the shortage of hotel supply, infamous tourist destinations of the country such as Ho Chi Minh City, Hanoi, Da Nang, Nha Trang, and Phu Quoc, the hotel lifestyle market is receiving considerable attention from investors especially homeowners who own nature-friendly properties with beautiful views.

Another factor that needs to be considered is sustainability and timeliness. Hotel lifestyle projects with modern design and decoration will attract many tourists. Besides, these accommodation spaces need to maintain consistent performance through regular maintenance, security enhancement and provision of regional specialties for tourists.