Vietnam real estate market analysis in 2010 and overview the market in 2011.

VIETNAM REAL ESTATE MARKET ANALYSIS IN 2010, OVERVIEW THE MARKET IN 2011

I. MACRO-ECONOMIC SITUATION IN 2010

1. GDP and CPI:
According to the General Statistics Office announced economic growth of Vietnam in 2010, gross domestic product (GDP), calculated at current prices, reached 1.98 million billion. This figure is equivalent to about 104.6 billion U.S. dollars (based on interbank rates on 28/12), more than about $ 13 billion in 2009.
Compare base period (1994), the growth rate of Vietnam's GDP reached 6.78% this year compared with 2009, nearly 0.3% Higher than the plan approved by Congress early . Growth rates were also increased in the quarter and highest in the fourth quarter (approximately 7.3%). On industry structure, industry and building the largest increase (7.7%), services 7.5%, while agriculture increased by only about 2.8%.
2 digit inflation in Vietnam in 2010 has been officially confirmed. 11.75% figure, though not too surprised but still exceed the targets set by Congress earlier this year, nearly 5%.
In particular, the new education is the strongest in the group increase the CPI basket of goods (nearly 20%). Followed by food (16.18%) and housing - building materials (15.74%). Posts and Telecommunications is the only group discount rate decreased nearly 6% in 2010.
In 2010, gold was up 30% while the rate of U.S. dollar is approximately 10%.

2. Trade balance:
Balance of payments deficit higher. The cause of this situation is the large deficit for many years and continues to make foreign exchange reserves decline, the foreign debt should rise and put pressure on the currency.
According to the General Customs Department in 2010, total import and export goods of Vietnam reached nearly 157 billion dollars, up 23.6% compared to 2009. Of which:
- Exports: The value of exports reached 72.19 billion U.S. dollars, up 26.4%
- Imports: The value of imports reached 84.8 billion U.S. dollars, up 21.2%.
- Trade balance: goods trade deficit was 12.61 billion or 17.5% of exports of the country.
3. FDI: Increases but implemented capital reduction of registered capital.
Capital of foreign direct investment (FDI) made in 2010 reached $ 11 billion up 10% compared with 2009 and reached the plan.
However, registration of new FDI in 2010 reached nearly 18.6 billion, lower than planned. Compare the registration number and shows that the rate of implementation has improved significantly. In addition, more than 1.36 billion U.S. dollars registered capital also proved more FDI enterprises operating in Vietnam believe the investment environment is better.
 
According to a report on the status of FDI in 2010, real estate sector has attracted most FDI with $ 6.8 billion new subscribers, but the processing industry, manufacturing has narrowed the gap with the $ 5 billion, showing a positive trend of FDI into the region is shifting more production. In 2009, these two areas attracted the registered capital of 7.6 billion dollars respectively, and 2.97 billion dollars. Manufacturing sector, electricity, gas, water came third with over $ 2.9 billion.

4. FII and capital remittances.
12/2010 In July, remittances estimated to reach about 770 million, bringing total revenues in 2010 remittances of up to 8 billion, up approximately 25.6% of total remittances in 2009. Besides income from remittances, portfolio investment inflows into Vietnam this year from a surplus of approximately $ 800 million, the disbursement of foreign investment in 11 months rose 9.9% over the same period last year.

5. Exchange rate:
And pressure fluctuations of exchange rates. Between the years 2008-2010 Vietnam dong has depreciated 30% against the dollar. Date 28/4/2010 rates on the free market for the first time lower than the exchange rates of commercial banks. And the exchange rate listed by the commercial banks during this period also consistently lower than the ceiling allowed the central bank, stood at 18,950 - 18.970dong/USD.

August 2010, the central bank increased rates, average inter-bank added 2.1%, up to 18,932 dong per dollar. Last November, the rate soared from 21,380 to 21,450 dong per dollar, on the free market exchange rate to exceed 21,500 dong per dollar. Rate difference between black market and official exchange rate compared to 10%. This is the highest disparity in Vietnam's financial history from 1990 to now.
Abnormalities of the exchange rate also shows that psychological factors people do not believe in the value USD. Despite the devaluation of the dollar in the world, people, businesses still keep holding dollars. This keeps the pin, from the economic perspective, society is due to inflation of Vietnam's increasingly serious.

6. Government policies on Real Estate:
71 Decree providing detailed regulations and guidelines to implement the Law have many innovative content are both investors and consumers are very supportive.
Circular 16 dated 15/10/2010 guiding Decree takes effect 71 to allow content notarized authorization form property in the future in making real estate investors are expected to "float" to Real estate market quiet escape now.
Besides, the acceptance certificate of ownership (pink book) for mini apartment partly unleashed mini projects and private apartment appeared a series of mini-apartment project.
13 Circular of the State Bank are effective on 1/10/2010, increasing the risk factor from 100% to 250% for business loans, real estate, increase capital adequacy ratio (CAR ) of banks to 9%. Led to the housing loans will be harder, because the banks will have to credit crunch in the sector to ensure capital adequacy for the banking system.
Decree 69 on the issue by the Government clearance was issued in August 2009 but was executed in 2010, early in the project cost by increasing the maximum compensation to more than 5 times, generally made invisible increased investment costs many times more affected by borrowing more money, longer, cheap labor, machinery, ... rise. That has pushed property prices up higher.
With the government tightened credit to real estate and securities in 2011 to below 15%, the situation for real estate which will be very difficult and many projects will be able to be delayed.

II. OVERVIEW OF REAL ESTATE MARKET IN 2010
In 2010, real estate market in two major economic centers, Hanoi and Ho Chi Minh City has continuously increased volatility-reducing irregularities. While in Hanoi, real estate market continues to rise and complicated, Ho Chi Minh City saw sharp reduction in transaction costs and the housing slowdown.
- Offices for rent in Ho Chi Minh City: In mid 2008, prices for luxury office space is 50-55 m2; class B is about 36-38 m2. Early 2009 to begin rents decreased, to 2010 rents continue downward trend, and many consulting companies predicted this trend continued in 2011.
- Apartment in Ho Chi Minh and a number of projects in Hanoi: status offered little more buyers.
- Land prices in major cities increased, many investors have chosen the small-town surroundings to look for opportunities such as Binh Duong, Dong Nai, Long An in the South, Hung Yen, Hai Duong, Hoa Binh, ... in the north.
Fever for three land price increase in April, 5. The reason is that investor psychology, the distortion of information or speculation is not correct misconceptions about the basic orientation of the planned projects on construction of Hanoi had no small impact on investors' decisions, thereby affect market trends.

1. Large supply
In Ho Chi Minh:
- Project Bitexco Financial Tower 68 storeys high was officially opened.
- The amount of both new and old apartments remain for sale are about 50,000 units.
In Hanoi:
- Keangnam Landmark Tower in stages of completion.
- General Construction Joint Stock Company Vietnam Oil and Gas has announced to build 102-storey building, estimated at 528m height.
- Northern Business Group also announced today a 100-story skyscraper in Pham Hung Street, Hanoi.
- Industrial and Commercial Bank of Vietnam has officially started 68 towers and 48 floors in Ciputra urban (Hanoi), with an investment of $ 400 million.
- The social and housing for low-income people: In the short time there were about 190 projects with total capital of over 28,000 billion VND to be registered with the size approximately 170,000 apartment building corresponding to approximately 7 million m2 floor, meeting for 700,000 low-income people.
- Real Estate Resort: The villas third quarter in 2010 to about 11,000 units increased 5 times compared with the end of 2009, number about 10,000 apartment units increased 3 times compared to 2009. While the real estate market is quite quiet, the seaside villas million cost is expensive goods. Report of research firm Real Estate shows that wealthy people Vietnam is the main customers of the villas and apartments in Danang. Hanoi volume buyers accounted for the highest rate, nearly 80%, HCMC, only about 13%, the rest are foreigners and other provinces.

2. Source of demand reduction:
- Growth rate of credit and raising money: The total payment to increase 25.3% compared to 31-12 late in 2009; raise capital increased by 27.2%. If excluding damage caused by the exchange rate and gold price increases, the total payment means increased 23.0%, up 24.5% raise capital.
- The speed of population growth and urbanization:
Along with the urbanization rate dizziness (30% per year), the urban population is increasing rapidly. If in rural areas increased by an average rate of 0.4% per year, the figure in urban areas is 3.4% per year and there are 25,436,896 people living in urban areas, accounting for 29, 6% of the total national population.
The average housing area increase: housing area per capita national average of 16.7 m2, of which urban area is 19.2 m2 and in rural areas is 15.7 m2 / people. In households with housing, some households have 46.3% permanent, semi-permanent housing accounts for 37.9%, the lack of permanent housing accounts for 8.0% and 7.8% simple. .
The proportion of households with a housing area of less than 15m2 after 10 years did not increase significantly and the number of households used in a wider area of 60m2 has increased rapidly in 1999 was 24.2% of households family in 2009 and to this figure is 51.5%.

3. Prices of some areas in HCMC, Hanoi.
In Hanoi:

Land prices in many areas has increased dramatically from 40% to 50% compared to 2009. New price has been established that many investors are not out of awe. End of 2010 a new price is set.

Dist. City:
The most recent report on the apartment market shows of Savills Vietnam, III/2010 quarter, about 4,400 apartments were sold. This is the highest sales since the beginning of the year, equivalent to the number of apartments sold in the first 6 months and 80% of them are ordinary apartments. Although home sales price was higher than supply, but there are still too few: providing nearly 11,000, while only about 4,000 bridges.

III. OVERVIEW THE MARKET IN 2011
Firstly, in short, the current inflationary pressures and the ability to exchange rates, coal, electricity, fuel price increases ... the next 6 months, interest rates may be lower. With interest rates 20 - 21% per year as at present, both the construction companies and real estate business and who need loans can be very difficult to access capital.

Secondly, land prices, house price is too high compared to the general income of the people of Vietnam. In developed countries, house price index / income at only 5-6 times, then in Vietnam is 26 times. Especially housing and land prices in Hanoi have been so high that speculators could not "hold." According to real estate investors in Hanoi, the demand for housing and land price segment is growing weak, specifically through almost no successful transactions in the last months of 2010, although the time on multiple sources of remittances.

Thirdly, the supply of housing and land is abundant and land prices in the long run will tend to reduce or even macroeconomic developments are positive, the chances are also hard to appreciate. According to the Ministry of Construction, in HCM City has more than 1,400 housing projects have been implemented in Hanoi is also more than 800 projects.

With the analysis above, according to the VITID GROUP commented in 2011:
- Land prices tend to remain stable (non-surge) as in 2010. In the project to ensure the progress, infrastructures have been completed, there will be many transactions take place.
- Demand for homeownership will continue to land, the buyer will continue to invest in property in order to minimize risks in Vietnam dong currency devaluation. Most are reasonably priced land.
- Apartment segment will transition to secondary. Apartment and secondary levels will tend to reduce prices. Home buyers have real needs will have the opportunity to buy houses at reasonable prices.
- The villa: The development of infrastructure are two areas of Ho Chi Minh City and Hanoi are focused, convenient transportation. Tend to choose housing of high-income class people have towards the outskirts of the city, where environmental, natural scenery and convenient transportation.
In 2011, according VTID Group, if any available cash and investments, customers want to invest in land price to avoid risk.
- Recommendation:
The above analysis of VTID GROUP is for reference only. We do not accept any responsibility whatsoever for the consequences that may occur by using information of the article.