Five Trends That Will Define Vietnam’s Property Market in 2020
2015 was a turnaround year for Vietnam’s real estate market as foreign property investors were allowed to invest in it. What we have since then is one of the hottest real estate markets in the world that offers the highest ROIs.
Four years later, property investors, both domestic and foreign, wonder whether that strong momentum will be still present in 2020 as well?
To answer that, we have compiled an analysis that we think will explain what is to be expected from the Vietnam property market in 2020. Here are the top five trends that we think will shape and steer Vietnam’s property market in 2020.
#5 A strong economy and village to city migration
The economy is predicted to grow by around 6,8% in 2020. Much of that growth is attached to Vietnam’s cities that are drawing masses of people from the rural area. That alone had a massive impact on the real estate market in 2019, and that trend will persist in 2020 as well.
The village to city migration has created an outstanding demand for low and mid-end residential units. And from the look of things, there are only indications that trend will grow with a strong pace in 2020 as well.
For example, thanks to that, real estate prices in Ho Chi Minh city rose for incredible 21.6% in just one year. In Hanoi, the surge was just 6.9% and not that spectacular as in HCMC. But 6.9%, in any other part of the world, would be considered excellent.
#4 Vietnam’s improving infrastructure
Vietnam’s government is dedicated to investing heavily in infrastructure projects like highways, airport expansions, subway systems in both HCMC and Hanoi, and many other projects.
The fact that their infrastructure investments are measured in billions speaks volumes about their dedication and focus on making Vietnam even greater. Foreign property investors see that as a very positive sign, along with the galloping economy, and the strong village to city migration.
#3 Tourism & Growth in Coastal Cities
Vietnam’s tourism sector is growing at an excellent pace. 2018 was their record year when they recorded 15,5 foreign tourists. The total number of foreign tourists in 2019 has not been released but is going to be in that region as well.
In the meantime, the government has finished a strong infrastructure investment cycle in tourist areas like Phu Quoc, Ho Tram, Nha Trang, Danang, Mui Ne, and Quang Nam. Plus, they prepare to start another infrastructure investment cycle, which will further improve the local infrastructure, which is key to the development in this sector.
#2 Technology companies will drive the demand for ideal office space
E-commerce, logistics, BPOs, and the IT sector, in general, is seeing sort of a renascence in term of growth. That growth is expected to remain strong in 2020 as well. What that means for the real estate market is a huge demand for office space in Vietnam’s biggest cities where these companies are located or have branched out.
Most of their workforce are young people that pay more attention to their workplace, where it is, how it is structured, and whether it is attractive enough. That mentality and the rapid growth in this sector is the true drive for top offices spaces.
#1 Hotel Lifestyle and millennials
It is fair to say that millennials play a big role in Vietnam’s strong economic growth. At the same time, it is also fair to say that their lifestyle is way different than their parent’s and what we’ve seen with other, older generations of people.
Millennials are way more vibrant, dynamic, don’t’ mind to move around, change jobs, explore new things and communities.
That propels a new trend in the real estate industry. Their “hotel lifestyle” is what created this growing demand for short term rentals. They are not so eager to buy a property as they are in rent. They would rather spend their money on travel and experience, than on making a huge commitment to a real estate property investment. Real estate property investors have already acknowledged the new reality and are directing their investments accordingly, toward facilities more suitable to the millennial’s lifestyle.