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Expert Opinion: Neil MacGregor Discusses Real Estate in Viet Nam

2021 was a difficult year for the Vietnamese economy and the real estate market in particular. We sat down with Mr Neil MacGregor, Managing Director of Savills Viet Nam to discuss the market’s performance in 2021 and the trends he forecasts for 2022.

Q: In your opinion, which sectors will shine in 2022? Why are they the market leaders? 

Neil MacGregor: For residential property, townships will be key in 2022. There have been several key townships developed over the last couple of years in Dong Nai, Long An and Binh Duong. This will continue to be a trend as residential stock in HCMC is limited. Investors and developers will invest in these townships, especially as infrastructure linking these areas to the city improves. 

The Industrial and Logistics sector will continue to boom. This sector has been hot for the last couple of years, and it will continue to gain momentum as manufacturers start to build their facilities in Viet Nam. For example, LEGO Group recently announced they will build a new factory in Binh Duong and will invest over US$1 billion. There are several new and growing sectors to keep an eye on too. For example, there will be growth in warehouses distribution, e-commerce services, data centres and cold storage.

Q: Based on buyer/investor demands, is consumer behaviour changing? Has the pandemic influenced these changes?

 Neil MacGregor: One of the key trends in the post-pandemic is the combination of working from home and working at the office (hybrid working). Occupiers and workers want high-quality, beautiful workspaces that not only encourage collaboration and productivity but also flexibility. Hybrid solutions can also save occupiers money and can boost efficiency.

For Residential and Resort investments, as a global trend, buyers are looking for suburban or beach properties. This is as they give buyers space and access to the outdoors. Some hot markets include Bao Loc, Da Lat, and Ho Tram as buyers can reach these destinations by car from HCMC. We expect this trend to outlast the pandemic. 

 

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Q: What difficulties will Vietnamese real estate face in 2022?

Neil MacGregor: Limited supply is undoubtedly one of the biggest challenges for anyone looking for property at the moment. Currently, there is not enough supply on the market. For residential buyers, particularly those looking for more affordable properties, there are very few options. For office occupiers, finding large spaces in the CBD is difficult; this is also a problem faced by industrial occupiers. Therefore, the government must intervene and simplify legal procedures so that a bubble does not form. Otherwise, prices are going to continue to rise throughout 2022 and property will become less affordable.

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Q:Will there be any new products in the Vietnamese market next year?

Neil MacGregor: The Vietnamese market may not necessarily have new products, but there will be products that the market needs. As I mentioned earlier, data centres will be a key growth area as the booming internet economy needs space to store its data. So, there will be huge interest in developing data centres. Although this is not an easy sector for investors to move into, we expect there will be development.

There will be a demand for cold storage serving e-commerce, retail, and import/export demands. Hospitality's return will also create demand for cold storage. Lastly, one trend that we will see is digital property investment, which appeared pre-pandemic and was fast-tracked over the last two years. People started to buy shares in real estate products online, and we expect this trend to continue to grow in 2022

In summary, there is a lack of supply, and the government must continue to improve legal frameworks to support property investment. By doing this, economic bubbles will not form, more supply will launch, and this will also entice FDI into real estate. When this happens, buyers, investors, and property owners will have more products to choose from within big cities and surrounding provinces.

 

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