The real estate industry analysis report of VNDirect Securities Company assessed that a large-scale recovery of the market will help boost the real estate industry in 2021.
- Home loan interest rates will continue to be low in 2021
Home loan interest rates are likely to continue to remain low to stimulate real estate demand…in 2021
Analysts at VNDirect forecast that Vietnam can attract many investment flows and expect disbursement of FDI projects to increase by 7% in 2021. The promotion of the relocation of production facilities from China to Vietnam after the trade war between the US and China as well as diversifying the supply chain after the pandemic will support and increase capital flows to Vietnam, especially in the industrial zone sector.
Public investment is also being promoted, especially in infrastructure development, which has a direct impact on the real estate market and becomes the main growth driver from this year onwards. This activity will continue to be promoted in 2021 when the Government plans to implement 3 component projects under the North-South Expressway project in September 2020.
An important factor related to the development of the real estate market is home loan interest rates.
The State Bank of Vietnam has cut operating interest rates three times in 2020 to help the economy revive. This has helped reduce the pressure on provision costs for banks and reduce interest costs for customers. Therefore, banks have introduced stimulus packages such as interest exemption/reduction and loan interest reduction to reverse the low capital needs of homebuyers due to the impact of the pandemic and the lack of housing supply. As of November 2020, the adjusted home loan interest rate from domestic banks fell 1.8 percentage points to 9.5%, the lowest level in 10 years.
In the context of cooling inflation pressure, VNDirect expects the State Bank to maintain accommodative monetary policies in 2021, although it does not expect to reduce the operating interest rate further, but it is likely to No further increase in 2021 aims to continue supporting the economy by maintaining accommodative monetary policies. Accordingly, this securities company believes that home loan interest rates will continue to remain low in 2021 to stimulate demand for the real estate segment.
M&A WILL HELP REAL ESTATE MARKET IN 2021 BETTER
VNDirect also assessed that the lengthy legal approval process since mid-2018 and the impact of the Covid-19 epidemic have caused many small-scale developers to face financial problems. However, this has created an opportunity to hunt for land for real estate companies with strong financial potential.
In addition, according to Colliers Vietnam, in the 9 months of 2020, there are at least 10 new foreign developers from Korea, Japan, China and Singapore looking for opportunities to enter the Vietnamese market, a remarkable number. surprised when compared to the current 12-15 foreign developers.
- Home loan interest rates will continue to be low in 2021
M&A deals, especially the transfer of component projects in large-scale projects are considered the fastest solution for foreign investors to enter the Vietnamese market and investors. in the country to expand the land fund. A number of projects from major companies are currently in negotiation, some have completed negotiations on important financial terms in the fourth quarter of 2020, and are expected to be completed in 2021 thanks to improvements. within the legal framework from the New Investment Law 2020, which takes effect from January 1, 2021.
