VN real estate investors advised to ‘put eggs in many baskets’
To minimize risks as the real estate market has decelerated, investors have been told not to pour all their money into one project.
Nguyen Loc Hanh, CEO of Ngoc Chau A Real Estate Investment, predicted a volatile 2020 for the real estate market, saying that there are big challenges related to the legal framework, changes in investment tastes and the covid-19 epidemic.
The problems related to legal procedures have affected the supply of real estate products, pushing the house prices up. The changes in the investment tastes have driven the cash flow out of the real estate market. Meanwhile, nCoV outbreak is believed to cause shocks to the resort real estate market segment.
In such conditions, investors tend to choose the projects which ensure safety instead of the ones which promise super-profit.
Hanh went on to say that the investors who have huge capital of their own will have advantages over investors who have to borrow money from banks, because 2020 is the time when ‘cash is the King’.
|With a stable cash flow, investors won’t have to be too hasty in choosing investment channels. In 2020, the market is believed to see demand decreasing, so the investors who have money of their own are believed to be able to buy products at reasonable prices.|
With a stable cash flow, investors won’t have to be too hasty in choosing investment channels. In 2020, the market is believed to see demand decreasing, so the investors who have money of their own are believed to be able to buy products at reasonable prices.
If investors only have about VND1 billion, they can buy small apartments in HCM City. Those who have big money should ‘put their eggs into many different baskets’.
With capital of VND2-4 billion, investors can put money into two groups of assets. The first is the real estate located in the suburbs of HCM City. The second comprises products in the localities adjacent to HCM City.
Meanwhile, those who have VND5-10 billion or more should divide the money into two parts – one part (65 percent) and a smaller 35 percent. With the bigger part, they should invest in projects in HCM City. For the smaller part, they can invest in provincial markets.
In the current conditions, investors are advised to pour money into localities with high liquidity. This allows them to easily withdraw capital when necessary, or when the market turns bad. HCM City, which is believed to be the busy market in the country, should be the top priority and it deserves the bigger part of investments.
For example, if an investor has VND10 billion, they should reserve VND6.5 billion (65 percent of VND10 billion) for investments in the projects in the inner city and suburbs of HCM City. They can buy real estate projects for lease, which can bring stable income and ensure the value of the properties.
With their massive land funds and ample investment inflows for transport infrastructure development, the suburban cities surrounding Ho Chi Minh City are projected to become the next hotspot for investors and buyers.
The Vietnam Real Estate Association (VNREA) will next month propose solutions to Prime Minister Nguyen Xuan Phuc to remove difficulties in administrative procedures, capital and cut loan interest for real estate businesses.