Real estate market likely to 'explode'

At the forum "Real Estate Investment in the New Era: New Thinking - New Opportunities" held on the afternoon of July 3rd, Mr. Nguyen Trung Vu, Chairman of the Board of Directors of Cen Group, stated that the real estate market is facing the risk of oversupply as developers rush to develop large-scale projects.

" The real estate market is likely to 'boom'. This boom will occur in a different aspect, not in prices, because high prices will make it difficult for people to buy houses, but in the supply, " Mr. Vu emphasized.

Experts warn of the risk of oversupply of housing. (Illustrative image: Minh Duc).

Mr. Vu cited the example that, in the past, a scarcity of supply drove up real estate prices. For instance, the 88 Lang Ha apartment project saw its price increase from 40 million VND/m² to 100 million VND/m², a 2.5-fold increase. However, in the near future, the market will shift from a shortage of supply to an oversupply. We will be living in a period of "oversupply" in real estate, with supply increasing dramatically.

Previously, projects with a scale of several hundred to a thousand hectares were considered "large-scale." But now, the market is seeing many mega-cities with a scale of several thousand hectares, even 10,000 hectares, "creating a completely different playing field led by large investors."

The chairman of Cen Group warned that oversupply coupled with high prices could lead to illiquidity because it exceeds the affordability of the majority of the population, making it increasingly difficult for young people to find a place to live.

" Lessons from many abandoned urban areas in China and even domestically show that projects that build many houses but fail to attract residents pose risks to the market ," Mr. Vu said.

Mr. Vu also stated that in the next 5-10 years, the investment and business strategies of enterprises will completely change compared to the past period. For the past 10 years, the market has suffered from a severe supply shortage. But from now on, the market will enter a period of supply boom, which is a very significant change.

Sharing the same view, Dr. Le Xuan Nghia warned that in 2016, efforts to address the oversupply of housing inadvertently created a paradox: a subsequent shortage of projects, driving up real estate prices in the recent period.

However, contrary to the supply shortage of the past few years, Mr. Nghia believes that the market will soon experience an oversupply.

Besides the risk of oversupply, Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), also pointed out a prominent issue: land prices in many localities are being inflated to levels far exceeding reality. In many places, land prices in the official price list are rationalized from transactions with very large bubbles. This is extremely dangerous because it reduces investment attractiveness and makes it difficult for those with genuine needs to access land.

Real estate businesses, especially small and medium-sized enterprises, still have weak internal capabilities. Many have revealed numerous problems, even collapsing when incidents occur. Meanwhile, those businesses that have overcome the recent difficult period did so thanks to years of prior resource preparation and strategic planning.

" The formation of megacities spanning tens of thousands of hectares cannot rely solely on small businesses. We need large enterprises to lead the way, while small and medium-sized enterprises must work alongside to gradually build internal strength ," Mr. Dinh added.

Another problem is the limited quality of the capital market. When a crisis occurs, credit becomes congested, and businesses lacking long-term funding channels fall into liquidity crises, experiencing rapid declines.

To avoid a repeat of the "bubble-collapse" cycle, experts suggest strengthening transparent controls, especially requiring transactions to be conducted through exchanges to minimize speculation and price manipulation.

" Good control is necessary, but conditions must also be created. If we do things half-heartedly, the market will remain opaque and easily manipulated ," Mr. Dinh emphasized.

Source: https://baolangson.vn/thi-truong-bat-dong-san-nhieu-kha-nang-se-bung-no-5052213.html