Vietnam's Real Estate Market Keeps DROPPING, Rents go CRAZIER!!

Summary

Vietnam's real estate market is experiencing a significant downturn in 2023, with sales plummeting over 92% and a surge in bankruptcies among real estate companies. Despite government incentives, the market remains stagnant with low transaction volumes. However, the rental sector is thriving, with rental prices increasing due to high property values and demand from renters. The industrial sector shows promise with high occupancy rates and interest from multinational corporations.

Takeaways

• 🛠 Vietnam's real estate market is facing unprecedented challenges in 2024, with low sales and high bankruptcy rates.
• 🔍 Sales have plummeted significantly, with over 92% drop in transactions for townhouses and villas, highlighting the market's dire state.
• 💸 Despite government incentives and lower prices, the market remains stagnant with few transactions, reflecting a lack of buyer confidence.
• 💳 The rental market presents a paradox, soaring despite the overall downturn in the real estate sector, driven by increasing demand from renters.
• 💼 A notable shift has occurred, with investors and buyers adopting a cautious approach, moving away from purchasing towards renting.
• 📈 Prices for rental properties have increased significantly, with some areas seeing up to 30% hikes, underscoring the growing demand for rental units.
• 💵 High property prices and strict loan requirements have deterred consumers, contributing to the real estate market's challenges.
• 🔧 Legal and construction requirement processes have become more cumbersome, further slowing down transactions and developments.
• 👨‍💻 Ken Yung, an experienced international and business immigration lawyer, provides insights into the situation, suggesting industrial real estate as a potential opportunity amidst the slump.
• 📢 The industrial and logistics sectors remain vibrant, with multinational corporations driving demand for industrial spaces, offering a silver lining in the current real estate landscape.

Q & A

What is the current state of Vietnam's real estate market according to the transcript?

The real estate market in Vietnam is facing unprecedented challenges with extremely dire circumstances. Sales numbers have dropped significantly, with some properties experiencing a decline of over 92%. The market is in a slump with very few transactions of buying and selling properties, despite government incentives and developers lowering prices.

What factors have contributed to the collapse of the real estate market in Vietnam?

The collapse is attributed to high property prices, strict loan requirements, a desire among investors and consumers for higher liquidity, slow market movement, limited supply of new projects due to developer hesitancy, and longer legal and construction requirement processes.

How has the real estate market's downturn impacted the economy and employment in Vietnam?

The downturn has had a significant impact on the economy and employment. Around 1,300 real estate companies filed for bankruptcy in 2023, leading to a 21% increase in disbanded or suspended companies compared to 2022. Additionally, 70% of brokers quit their jobs, and construction companies saw a 16% drop in revenues and 66% decrease in profits.

What is the current trend in the rental market in Vietnam?

In contrast to the selling market, the rental market in Vietnam is experiencing an increase in prices by 10 to 30% due to higher mortgage interest rates and property prices. This has led to a rise in demand for rentals among both locals and foreigners.

How does the demand for industrial rentals look in Vietnam?

The demand for industrial rentals is positive, with occupancy rates in the north at about 83% and in the south at 91%. Multinational corporations are moving their factories to Vietnam, leading to a rise in industrial rentals and a good sign for the continued growth of the industry.

What are some of the government incentives to stimulate the real estate market?

The government issued a stimulus package worth VND 120 trillion, although only 83 billion VND has been dispersed so far, which is only 0.07% of the allocated amount. These incentives are aimed at encouraging transactions and boosting the market.

What is the role of foreign investors in the Vietnamese real estate market?

Foreign investors play a significant role, especially in the industrial sector. Many multinational companies are looking to move their factories to Vietnam, thereby increasing the demand for industrial spaces and zones. Foreign investors are also looking for opportunities in the industrial, logistics, or supply chain sectors to invest in real estate.

What is the impact of high property valuations on the real estate market?

High property valuations have led to higher loans, often up to 100% of the market value, making it difficult for buyers to sell at lower prices. This has resulted in unreasonably high prices, which in turn has contributed to the increase in rental costs as demand for properties remains high.

What are the rental rates for a one-bedroom apartment in different areas of Ho Chi Minh City?

The rental rates vary depending on the location and quality. For example, a one-bedroom in District 9 might cost about 8 million VND per month, while in the Ban Pearl Plaza area, it's around 16.5 million VND, in District 2 or Thao Nhim it's about 22 million VND, and in District 1 or the Golden River area, it's approximately 25 million VND per month.

What advice does Ken Yung give to those interested in investing in Vietnam's real estate market?

Ken Yung advises investors to look at opportunities in the industrial, logistics, or supply chain sectors. He also suggests that Vietnamese descent individuals should consider obtaining a Vietnamese passport and citizenship to own land outright. Long-term investments through the DT program or getting a work permit TRC are also recommended for staying informed and involved in the market.

How can foreigners invest in Vietnam's real estate market?

Foreigners can invest in Vietnam's real estate market through various means, including obtaining a long-term lease on land for factories or industrial parks, benefiting from the DT program, or getting a work permit TRC. They can also seek assistance from law firms experienced in helping foreigners invest in Vietnam.

Outlines

00:00

📉 Unprecedented Challenges in Vietnam's Real Estate Market

The Vietnamese real estate market is experiencing a significant downturn, with sales numbers plummeting over 92% and a surge in bankruptcy among real estate companies. Despite government incentives and developers lowering prices, transactions remain scarce. The market is in a slump, with a stark reality of low sales, high rental prices, and a paradoxical situation where investors are hesitant to buy, yet renters are flooding in. The video aims to provide an unfiltered view of the market's current state, focusing on the impact on buyers, investors, and renters.

05:01

🏢 Impact on Economy and Employment

The real estate crisis has had a ripple effect on Vietnam's economy and employment. Over 1,300 real estate companies closed in 2023, an 8% increase from the previous year, leading to a 70% job quit rate among brokers. Construction companies saw a 16% drop in revenue and a 66% decrease in profits. The government's stimulus package has been insufficient, with only a small fraction of the allocated funds dispersed. In contrast to the struggling sales market, rental prices have risen due to higher interest rates and property prices, reflecting a shift towards the rental sector as buyers and investors adopt a wait-and-see approach.

10:02

🏭 Resilience in Industrial Real Estate

Despite the challenges in the residential and commercial sectors, Vietnam's industrial real estate market remains robust. The occupancy rates in industrial zones are high, with multinational corporations looking to move their manufacturing bases to Vietnam. The country's industrial sectors, such as pharmaceuticals and technology, are showing strong signs of growth. Foreign nationals and companies continue to invest in the market, with options for long-term leases and citizenship for Vietnamese descendants to own land outright. The video encourages viewers to look beyond the slump and focus on the opportunities in industrial logistics and supply chain investments.

Keywords

💡Real Estate Market

The real estate market refers to the economic sector involving the buying, selling, and development of land, buildings, and housing units. In the context of the video, it highlights the challenges faced by Vietnam's real estate market, such as a significant drop in sales and an increase in bankruptcy among real estate companies.

💡Unprecedented Challenges

Unprecedented challenges refer to difficulties or problems that have not been experienced or encountered before, often indicating a unique and complex situation. In the video, this term is used to describe the extreme difficulties faced by Vietnam's real estate market, including a 92% drop in transactions and a surge in bankruptcies.

💡Bankruptcy

Bankruptcy is a legal process that occurs when a person or business is unable to repay their outstanding debts. In the video, it is mentioned as a significant consequence of the real estate market downturn, with '1,300 real estate companies filed for bankruptcy in 2023'.

💡Rental Market

The rental market involves the leasing of properties, such as houses or apartments, to tenants for a specified period. In the video, it is contrasted with the selling market, showing a different trend where rental prices have increased by 10 to 30%, indicating a thriving sector despite the challenges in the selling market.

💡Economic Growth

Economic growth refers to the increase in the production of goods and services in an economy over a certain period. In the video, it is mentioned that the real estate market was once a thriving engine of economic growth in Vietnam but has now hit a wall, indicating a slowdown in this sector's contribution to the economy.

💡Foreign Investors

Foreign investors are individuals or entities from outside a particular country that invest capital in that country's assets or markets. In the video, the focus is on how foreign investors are navigating the challenges of Vietnam's real estate market, with some shifting towards the rental sector due to the stagnant buying market.

💡Legal and Capital Raising Issues

Legal and capital raising issues refer to the challenges related to the law and the process of acquiring funds, which can affect businesses and markets. In the video, these issues are cited as contributing factors to the collapse of the real estate market, with strict loan requirements and high property prices making it difficult for transactions to occur.

💡Supply and Demand

Supply and demand are economic principles that describe the relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. In the video, the imbalance between supply and demand is evident in the real estate market's slump, with a limited supply of new projects and a decreased demand from consumers.

💡Industrial Real Estate

Industrial real estate refers to properties that are used for industrial purposes, such as manufacturing facilities, warehouses, and research centers. In the video, it is presented as a bright spot in Vietnam's real estate market, with high occupancy rates and interest from multinational corporations.

💡Valuation

Valuation is the process of determining the value of an asset, such as real estate. In the video, high valuations are discussed as a factor that has contributed to the stagnation in the real estate market, as high housing valuations led to higher loans and inflated prices.

💡Economic rebound

An economic rebound refers to a recovery or improvement in economic conditions after a period of decline or slowdown. In the video, the economic rebound is mentioned in the context of the rental market, where increasing demand for rental units is seen as a normal response to the economy regaining strength.

Highlights

Vietnam's real estate market is facing unprecedented challenges with low sales numbers, having dropped over 92% in 2023.

Bankruptcy in the real estate sector hit a high in 2023, with 14,400 units quitting their jobs monthly due to legal and capital raise issues.

Despite low sales, the rental market in Vietnam is soaring, creating a paradox where investors are hesitant but renters are coming in droves.

Developers are reluctant to start new projects due to the high property prices and strict loan requirements.

Consumers are maintaining higher liquidity and not holding onto properties, expecting a slow market movement.

The supply of new projects is limited, with only 180 projects launched in Ho Chi Minh City in 2023.

1,300 real estate companies filed for bankruptcy in 2023, a 45% increase from previous declines.

70% of brokers quit their jobs due to the real estate market's downturn, impacting the economy and employment.

Construction companies' revenues dropped by 16% and profits by 66%, with a total profit of roughly $57 million.

The government's stimulus package of VND 120 trillion only had 83 billion VND dispersed, representing 0.07% of the allocated amount.

Rental prices increased by 10 to 30% in 2023 due to higher mortgage interest rates and property prices.

Foreigners are contributing to the rise in rental demand by coming to Vietnam for short-term stays or to work.

The industrial and logistics sectors in Vietnam are still thriving, with high occupancy rates and interest from multinational corporations.

Banks are lending for exports out of Vietnam, which supports the growth of manufacturing and industrial zones.

Foreigners can lease land for industrial parks for up to 99 years, and Vietnamese descent can obtain citizenship to own land outright.

Despite the slump in commercial and residential markets, opportunities exist in the industrial, logistics, and supply chain sectors for real estate investment.

Ken Yung, an international business immigration lawyer with 15 years of experience, provides insights into the Vietnamese real estate market.

For the most updated information on the Vietnamese real estate market, follow relevant social media channels and subscribe to YouTube for notifications.

Transcripts

Vietnam's real estate market is facing

unprecedented challenges situation is

extremely dire low sales numbers have

dropped over 92% bankruptcy in 2023

14,400 units quitting their jobs due to

the legal and capital raise issues they

go away from buying the less expensive

it be not transactions or people buying

cannot sell at a lower price it's not

the best time markets are in a slump so

the reason for this collap I want to

give you my own personal opinion

are you ready for this Vietnam's real

estate market is tanking but the rentals

are soaring just when you think you've

seen at all Vietnam's real estate market

throws you another curveball once the

thriving engine of economic growth in

Vietnam has hit a wall and is more

terrible than you can imagine but not

for everybody so it is 2024 and we were

expecting or at least hoping that the

real estate market would rebound but

right now it's a very very stand still

there are no transactions of buying and

selling the properties even in spite of

the government giving discounted rates

incentives and other encouragement for

people to buy sales have plummeted

tremendously in Vietnam what you're

about to get is an unfiltered Stark

reality of what's happening in real

estate market both for the buyers the

investors and also the renters as well

so if you're interested in real estate

definitely stick around for this content

and video that we're about to give you

as sales plummet but yet the real estate

rentals are still very high this is

creating a real estate Paradox in

Vietnam so the question is why are

investors running for the hills but yet

renters are coming into Vietnam in

droves we are going to get into the hard

facts and the figures to tell you the

reason

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why so hello my name is Ken Yung and

International and business immigration

lawyer with over 15 years of experience

globally and 10 years experience here in

Vietnam to help many foreign investors

to buy real estate in Vietnam invest

develop and other many projects as well

and that is something that we're going

to talk about today about the Vietnam

real estate

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market it's 2024 and yet Vietnam's real

estate market is facing unprecedented

challenges even in spite of devel Vel

opers dropping prices and the government

giving different incentives and also

encouragement for folks to buy

transactions in real estate is very few

and far between thus the situation is

extremely dire but we want to paint the

picture for you by giving you specific

numbers on what is happening in Vietnam

according to certain statistics by the

yoy real estate company DK Vietnam most

of the properties are sold in the lower

end sector which between $76,000 and

$96,000 per unit and most of those sales

actually happened in the first quarter

of uh 2023 with extreme declines in

Villas and Tow houses for the Q3 of 2022

also jll another real estate company

corroborated this information with

extremely low sales numbers for the

entire 2023 and also the projects that

are new in 2023 will cut down

tremendously only 180 projects were

launched in 2023 in hoim Min City so the

reason for this collap was due to the

high uh property prices the strict loan

requirements also the investors or

consumers wanting to maintain higher

liquidity and not uh holding on to

properties and also the consumer

expectation of a slow Market uh movement

and a slow pace as well also on the

other side there's a limited supply of

projects due to the developers hesitancy

to begin a project also consumers not

wanting to buy and finally the legal and

construction requirement processes have

taken a lot longer for example

especially in the transactions for tow

houses and Villas have dropped over 92%

which is the lowest in The Last 5 Years

in hoim city and benun acced for 45% of

that decline so as a result 1,300 real

estate companies filed for bankruptcy in

2023 based on the Vietnam Statistics

Office amongst the firms that left the

market uh the companies that were

disbanded or suspended increased by 21%

compared to 2022 also companies that are

filed procedures to disband and waiting

for the result have also increased 29%

compared to 2022 on average 14,400 units

have left left the market every single

month with the real estate market being

hit the hardest with over 1,300 real

estate companies closing in 2023 which

is an increase of 8% from

2022 this led to 70% of Brokers quitting

their jobs based on the Vietnam

associate realtor statistics this

impacted not only the real estate market

but the economy and the employment as a

whole statistics from the ministry of

construction showed that some of the

conu ction companies their revenues have

dropped by 16% compared to 2022 and the

profits have dropped 66% for a total

profit of the market of roughly about

$57 million the latest data from the

ministry of construction showed that the

successful transactions were less than

half of what they were in 2022 and this

was due to the legal and capital race

issues in fact the government issued a

stimulus package a vnd 120 trillion vnd

but up to this point only 83 billion vnd

have been dispersed which accounts for

only

0.07% of the amount allocated

contrasting the selling Market we look

at the rental market and it paints a

totally different picture right now in

2023 the prices of rental units have

increased from 10 to 30% due to some of

the higher interest rates on the

mortgage and also the higher prices for

the properties themselves thus most

people are having to rent including

locals and foreigners as well so in the

context of the real estate market the

buyers and investors are taking a wait

and see approach thus they go away from

buying and going towards the rental

sectors uh for example a one-bedroom

apartment in 2022 went for 15 million

2023 went for 16.5 million and an

estimate for 2024 is about $1 18 million

as you can see the rental markets

continue to rise due to the demand in

renters coming into Vietnam so if you

compare the rental prices of a

one-bedroom roughly about 50 square m

the further away from the CBD the less

expensive it will be for example if you

rent a one-bedroom in uh Vin holes

Central Park what is in toook or

formally District 9 would be about 8

million per month and as you get closer

to the city center a place called ban

Pearl Plaza you're looking at a one

bedroom roughly about 16.5 million and

then you get to a closer higher end area

in District 2 or toing such as the Nasim

which is roughly about 22 million per

month and then you get really really

close to District one which is the VIN

homes bassong or what we call the golden

river which you're looking at about 25

million per month as you can see there's

a Diversified rental rates quality and

location thus there are many options

available in hoim city for you to rent

so you probably watched a lot of videos

about the real estate market but I want

to give you my own personal opinion the

reason why we made this video so if you

look at the prices of the real estate

itself it continues to stay high even

though there are not transactions or

people buying and the main reason is uh

previously there were very high

valuation

on the projected growth of hoimin City

thus the housing valuations were high

they gave higher loans and many time the

loans were actually 100% of the market

value therefore the buyer cannot sell at

a lower price or what we would consider

a lower price than the market and thus

it creates unreasonably high price which

causes the increase in rentals because

now with the economy slowly rebounding

in different sectors there are many

foreigners coming in renting short-term

stays or getting visas and working in

Vietnam or they're coming back to their

old positions and working for companies

as well so thus the increase in the

rental prices is very normal due to the

increase in the demand of uh units

required but yet the prices are still

very high for the real estate itself and

this problem is not just in Vietnam it

actually happens in Bangkok in Hong Kong

and many other developed countries as

well so if you're looking to uh rent

into Vietnam right now it's not the best

time but in reality it's still cheaper

than many other parts of the world

despite the challenges in the

residential and Commercial Real Estate

marke in Vietnam the industrial uh

rentals and units are still a beacon of

light uh right now so there are many

multinational corporations looking to

move their factories into Vietnam and

renting the various different industrial

spaces and Industrial zones in fact the

the occupancy rates of the north were

about

83% here in the South about 91% and the

national average roughly about 80% which

is very good as these foreign Nationals

companies continue to move into Vietnam

especially in the manufacturing sectors

of pharmaceuticals technology and also

FNB as well this is a really great sign

that the industri will continue moreover

the banks also are lending for exports

out of it Nam which increases the uh

manufacturing and Industrial zones and

real estate properties for individuals

or corporate foreign buyers you can get

a 99e lease on the land that the factory

or the industrial park is in or if you

are a Vietnamese descent it would be

wise for you to get a Vietnamese

passport and citizenship to be able to

own the land outright just as a local

citizen would other options would be

long-term Investments through the DT

program getting a work perit TRC will

give you a longer stay as well so as a

law firm with over 15 years of

experience helping foreigners invest

into Vietnam our team of exts will be

happy to help you as I wrap up this

update although the real estate um

commercial and residential markets are

in a slump you have to look at the

opportunities in the industrial

Logistics or supply chain in order to

invest in real estate in Vietnam in

order to stay informed of the most uh

updated information make sure that you

like our Facebook page subscribe to

YouTube channel comment below about your

thoughts about the Vietnam real estate

market and of course click on the bell

for notifications so thank you very much

for watching this video and on behalf of

Yung Global my name is Ken Yung thank

you very much and I'll see you on the

next

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episode

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