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Is cash flow heading for VN real estate market?

As bank deposit interest rates are on the decrease and gold is becoming more and more expensive, idle money is expected to flow into the real estate market.

Commercial banks have made many interest rate cuts over the last year, for both short- and long-term deposits. Interest rates are at a 10-year low.





Meanwhile, SBV has been slashing the ceiling interest rates in order to help businesses access bank loans.

The interest rates quoted by four state-owned commercial banks have decreased by 0.25-0.3 percent per annum for less than six-month terms of deposits, and by 0.5 percent for longer-term deposits.

The highest interest rates applied to individual clients at Vietcombank, VietinBank, BIDV and Agribank are 6-6.1 percent per annum instead of 6.5-6.6 percent, the lowest in the banking system.

At other banks, including Techcombank, ACB and TP Bank, the interest rates have been cut by 0.5-0.9 percent.

As bank interest rates have become less attractive, investors are considering investing in securities, gold and real estate.

The stock market has incurred big shocks because of Covid-19, which has caused a stock sell-off wave. Meanwhile, the gold price has increased sharply recently, but gold prices always fluctuate.

As bank deposit interest rates are on the decrease and gold is becoming more and more expensive, idle money is expected to flow into the real estate market.

In such conditions, many investors have decided to seek shelter in the real estate market.

Su Ngoc Khuong from Savills Vietnam said investors now have many opportunities to buy best real estate products at this moment, because prices are coming closer to the real value.

Commenting about the real estate market performance in 2019, HOREA said this was the second year that the property market and real estate firms have had to cope with big difficulties.

“Most real estate firms have seen revenue and profits decrease. Some of them have taken a loss or faced bankruptcy,” said Le Hoang Chau, chair of HOREA.

The Covid-19 pandemic has also affected investors’ decisions as FDI in Vietnam as of June 20 fell by 15.1 percent to $15.7 billion.

JLL reported that in HCM City, A- and B-class offices have begun feeling pressure with the net absorption area for the first time becoming minus after one century. However, most realtors are still optimistic about market prospects, as there is a supply shortage in this segment, while there has been no considerable change in rents.

Retail is the sector that has suffered most from social distancing policies. Singapore has reported an 8.5 percent decrease in retail premises rent.

In HCM City, after the social distancing period, the average vacancy rate in retail increased to 30 percent in Q2. Many retail premises on Le Lai and Cach Mang Thang Tam streets, and shopping malls in districts 1 and 3, are seeking tenants.

Kim Chi


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