While bank interest rates remain low and the stock and cryptocurrency markets carry considerable risk, the real estate market, specifically the low-rise housing segment, is becoming attractive to medium- and long-term investors.
Challenges at every turn
With the pandemic evolving in complex ways, bank interest rates have fallen by 1.5% – 2.5%. Following successive policy rate cuts by the State Bank of Vietnam, savings rates have dropped to record lows amid weak absorption capacity in the economy and excess liquidity in the banking system.
According to recent data published by the State Bank, household deposits in banks increased by only VND 120,000 billion in the first four months of this year. This is the lowest increase in six years and only half that of the same period in 2019, before the Covid-19 pandemic. Low interest rates have made people less interested in depositing money in banks. As a result, household money is shifting to other profitable investment channels. The strongest investment trends today include stocks, cryptocurrencies and interest-bearing capital contribution schemes.
Low bank interest rates, stocks at record highs: which investment channel is safe?
However, besides the chance of a “big win”, each of these investment types carries considerable risk. A case in point is the stock market, which has become a booming trend over the past year or more.
Mr. P.M. Binh, who lives in Cau Giay, Hanoi, said that everywhere he went he heard friends talking about stock investments and big wins. Frustrated by falling bank deposit rates, Mr. Binh decided to withdraw his entire savings of VND 3 billion to buy stocks.
Mr. Binh is not alone: in the first six months of 2021 alone, the stock market welcomed more than 620,000 new accounts. However, many stocks have risen far beyond analysts' valuations.
“Not understanding it well and coming in later than everyone else, I faced a lot of risk. When the market fell sharply recently, the stocks I bought fell too. Shares go up by the ‘stairs’ and come down by the ‘elevator’, so I'm now down VND 300 million,” Mr. Binh lamented.
Another channel chosen by many is “virtual currency”. However, this channel is even riskier than stocks, as Vietnam still has no legal framework governing its issuance. The market itself has also shown erratic swings that have left investors reeling in recent days. The price of Bitcoin – the symbol of this market – is drifting further and further from its all-time high.
Promising channels remain
Although the pandemic slowed transactions, and despite risk warnings over the land fevers in the first months of 2021, the real estate market is still considered to have strong long-term potential.
At this time, investors should focus on safe, medium- and long-term investments. Attention should be paid to products with clear legal status and good infrastructure, in markets with potential in industry or tourism services…, avoiding “putting money down” just to follow the crowd.
Currently, in addition to core segments such as apartments, houses and freehold land plots…, another type of real estate attracting considerable investor interest is low-rise residential and commercial property (villas, semi-detached villas, townhouse villas, riverside villas, shophouses…).
“We expect more interest in low-rise residential real estate, provided prices remain affordable,” said Mr. Matthew Powell, Director of Savills Vietnam's Hanoi and Da Nang offices.
According to Ms. Vu Thi Thuy, the average primary price of villas is now nearly USD 5,000/m², up 10% quarter on quarter and 3% year on year. A similar trend is seen in the townhouse and shophouse segments. Over the past five years, secondary asking prices for villas and townhouses have risen by about 7% per year.
ACE Villas sits next to the 1.1 km walking street, open 24/7, at the center of The Empire coastal mega urban area. Fronting Non Nuoc Beach and set between two international-standard 18-hole golf courses, the Ace Villas semi-detached villas are inspired by “perfect cubes”, offering unrivalled luxury and sophistication.
At Ace Villas, a minimalist and fashionable design style creates a refined, captivating space down to the smallest detail, reflecting the uniqueness and aesthetic taste of the villa's distinguished owners.
Source: Nhip Song Kinh Te