Estimated reading time: 4 minutes
In recent years, the Vietnamese real estate market has been a topic of discussion, with speculations about the presence of a real estate bubble. A real estate bubble refers to an economic phenomenon where property prices experience a rapid increase, reaching unsustainable levels, and eventually decline. However, when it comes to Vietnam, it is important to analyze the situation in depth to understand the reality of the market.
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Foreign lawyers using chatGPT to write on banking and vietnam macro economics explaining the real estate market to Vietnamese and the world whilst never purchasing themselves any piece of land or apartment… experts on Linkedin are more dangerous than FB experts.
Is there a real estate bubble or crisis in Vietnam? NO.
It is crucial to dispel the notion that there is a real estate bubble or crisis in Vietnam. The government is highly vigilant about maintaining stability in the real estate sector, as any bubble could lead to social unrest. Various regulations and policies have been put in place to prevent such situations, ensuring a sustainable market growth.
NO. The answer is plainly no, there is no real estate bubble and the government will never let this happen to the risk of being overthrown.
An article recently circulated by an expat writer attempts to paint a bleak picture of the Vietnamese real estate market. However, it must be noted that the writer does not have first-hand experience in purchasing or owning property in Vietnam. The article mixes unrelated real estate cases to create a false sense of crisis. As someone who owns multiple properties and loans in Vietnam, I can confidently state that the market is stable and not facing a bubble.
Vietnam is a seller’s market led by a handful of large real estate promoters.
To understand what constitutes a real estate bubble, it is important to consider the dynamics of the market. Typically, a bubble occurs when there is a land boom with high market demand, leading to a rapid inflation of prices. However, in Vietnam, the market is primarily driven by the supply side, with a handful of large real estate developers dominating the industry. Most Vietnamese people live in townhouses, often with multiple generations under one roof. Luxury and extravagant designs are not common in typical Vietnamese households.
A handful of Vietnamese promoters buys the rights to build residential property on large pieces of land
The few privileged Vietnamese private developers who have secured rights to large land plots in prime locations optimize their projects for maximum profitability. This includes incorporating large shopping centers and recreational facilities, which are popular among Vietnamese families. It is not uncommon for these developers to build multiple buildings within a single project, providing a range of options to potential buyers.
Foreign promoters get smaller land and build the best projects
On the other hand, foreign developers often acquire smaller plots at market prices. They bring their expertise from various international real estate markets and focus on delivering high-quality projects that meet the demands of sophisticated buyers. These developers prioritize meticulous planning, engaging experienced architects, landscapers, and designers to ensure the projects are executed flawlessly.
Furthermore, it is important to note that the demand side of the market in Vietnam is not as sophisticated as in other countries. Mortgage loans are typically accessible only to the wealthy, resulting in a smaller pool of potential buyers. Additionally, some properties are designed specifically for expatriates who are unable to purchase real estate in Vietnam, further narrowing the target market.
In terms of pricing, there is a discrepancy between the offerings of the developers and the actual demand in the market. While there is a significant supply of high-end luxury apartments, luxury living is not deeply ingrained in the Vietnamese mindset. This mismatch between supply and demand can lead to challenges in selling these properties.
Again, there is no real estate bubble in Vietnam
It is important to look beyond sensationalized reports and examine the Vietnamese real estate market objectively. As of now, there is no real estate bubble in Vietnam. The government’s proactive measures and the market’s unique dynamics ensure a stable and sustainable growth trajectory. Investors and potential buyers can have confidence in the market’s long-term prospects.
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