August 29, 2022 | 16:03 GMT+7

Real estate stocks can’t rely on investment wave

Quoc Phong - An Phong -

Analysts at a recent talkshow discussed the impact on the real estate market of changes to the legal framework and offered opinions on the prospects for real estate stocks.

Photo: Illustration
Photo: Illustration

Speaking at the recent “New order in the real estate market in Vietnam” talkshow, Mr. Huynh Minh Tuan, Founder of FIDT and Brokerage Director at Mirae Asset Vietnam Securities Office, said changes in the legal structure for capitalization will create positivity in the market, and those that embrace it will thrive.

Answering questions about how the upcoming revised Draft Real Estate Law 2023 will impact on market trends, Dr. Pham Anh Khoi, Member of the Board of Directors at the Dat Xanh Group, said that over the last six months the threat of a real estate bubble has cooled. In cities with sustainable demand, such as Hanoi and Ho Chi Minh City, and in centrally-run provinces, most distribution and development projects reveal that demand is still quite high.

Seventy-five per cent of real estate developers in Vietnam are of small scale, while just over 20 per cent are professional units, showing that the potential for development is significant and needs to focus on supporting businesses.

It is therefore expected that changes in decrees, other legislation, and the requirements of real estate developers to meet certain criteria will help the market develop in the long term.

Moreover, according to Mr. Tuan, land funds are not the only driving force for real estate stocks, as sales capacity and other factors are also needed. Land funds also have a large debt coefficient that also creates debt pressure and jams cash flows.

He also suggested that investors not only look at investment waves going to real estate but also at the internal strength of the business. An investment wave similar to previous years is unlikely this year.

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