The decline in transaction volume during the second outbreak of COVID-19 pandemic has added another misery to the real estate market.

With the special feature of the operating industry that needs large cash flow and capital amount. Under the impact of COVID-19, experts consider the real estate market is going to be negatively influenced, especially, for customers and investors.

Toggle on all fronts

According to the website batdongsan.com.vn, since the second outbreak, the market indexes have been moving in a downward direction. Specifically, the apartment segment saw a 7% increase in listing volume compared to June whereas the level of interest and acquisition decreased by 7%.

Mr Dinh Minh Tuan_Director of batdongsan.com.vn branches in HCMC and Binh Duong claimed that the market is getting more difficult and transactions are decreasing. Compared to previous years, condominium prices usually have a growth of 3-13% per year depending on the segment, however, the rate of house prices are remaining unchanged.

According to experts, in the case COVID-19 lasts longer, there will be a cut-loss wave from investors who buy apartments for lease or those with unsustainable finances.

One reason for the decline in sales transactions is home purchases with the established schedule could be failed because customers lose cash flow. Mr Phan Cong Chanh, a real estate consultant believes that customers recently experience a decrease in their income which make them unable to pay as committed with the investor.

"Frequently, customers have used up their accumulated money to close the first instalment, expecting to accumulate and close the next instalment, but the epidemic causes more difficulties or even makes a big loss. This brings the real estate market a heavy reduction not only temporary but also long-term affect the market when the disease passes "- Mr Chanh stated.

Enterprises themselves also witnessed a heavy affection in the progress of their ongoing projects. Mr Ngo Quang Phuc_General Director of Phu Dong Group said that COVID-19 is a great challenge because if the investor who has a project under progress, has to pay the contractor fee. If the cash flow of the customer’s payment is interrupted,  the investor will get trouble. 

In addition to obstacles of different projects, the situation of real estate businesses on the stock exchange is not very positive. According to a statistic from Professor Can Van Luc, the real estate stock price has decreased by 16% compared to the beginning of the year, which is one of the 10 fields with the huge stock decrease. The report also pointed out that real estate is one of the 8 sectors most severely affected by COVID-19.

Vietnam experienced the largest fluctuation since the global pandemic

Change to adapt

In the context of pandemic COVID-19, all transactions are postponed in no time, the legal crisis coupled with the supply-demand mismatch, which forces the business lack of financial resources to leave the market. For those with stronger potential, are pushed to offer optimal solutions to restructure their portfolio, save costs or even accept discounts to sell goods, keep cash flow.

When launching new products, to ensure cash flow, businesses are required to restructure the list of announced projects in the direction of shortening, offering suitable projects such as affordable housing. Besides, it is recalculating payment methods so that buyers can pay.

Mr Le Trong Khuong - General Director of Hung Thinh Land said that businesses are currently managing the stretching of each payment period less, ensuring the income of home buyers can afford to pay due to the money flow guarantee.

To restructuring businesses, PhD. Can Van Luc mentioned to ensure market absorption while restructuring the portfolio of projects and products, businesses should focus on the current high demand segments such as affordable residential and industrial real estate, offices for lease and internal restructuring activities, try to diversify investment capital from FDI, issuing bonds, etc.

Besides, Mr Luc also said that businesses should also open their mindset, capture new needs of customers. Alternatively, to increase the application of digital technology to reduce costs.

Vietnam Export Values

Although these former difficulties are obvious, experts showed relatively positive signs such as credit capital in real estate in the first 6 months increased by 1.5%, FDI flow in the real estate sector reaches 2.8 billion USD and about 86,000 billion VND of bonds of real estate companies that have been successfully issued in the first 6 months of the year, if the business changes its mind, find "opportunities in risk", adapt there is still a chance to exist.