VietNamNet Bridge - The real estate market is not expected to be greatly affected by the Trans Pacific Partnership Agreement (TPP), experts have said.

Do Thu Hang from Savills Vietnam, a real estate service provider, believes that the Vietnamese real estate market would be ‘more active’ but demand from foreign customers would not increase immediately as rules under TPP would not take effect for some time.

When more foreigners come to Vietnam to do business, the demand for accommodation rentals will increase. However, in the long term, after TPP is implemented, this will affect many different segments of the real estate market. 

The industrial infrastructure development, for example, will get direct benefits as more foreign investors will come to Vietnam to set up factories. The office market segment will be more busy thanks to the higher number of foreign businesses joining the Vietnamese market.

Hang said the accommodation segment would also be busier because expats will need houses to lease and buy.

TPP will help the national economy prosper and this will help create cash flow in the market. However, Hang does not think the TPP membership would cause ‘real estate fever’ as the WTO membership did in the past. 

Hang said when Vietnam joined WTO eight years ago, Vietnam’s real estate market was still at the early stage of development. But the market has made a big leap: it does not lack goods for trading, and supply can satisfy demand from all groups of customers.

Nguyen Van Duc, deputy chair of the HCM City Real Estate Association, said there was no need to worry about the ‘hot development’ of the Vietnamese real estate market in the TPP period, because the market would bear fewer influences than other markets.

Duc said TPP, in general, would have good impact on the property market, especially industrial zone development, accommodation and resort real estate market segments, as foreign demand for the products will be increasing.

However, Duc warned that investors would meet high risks if pouring money into the high-end apartment segment which now is experiencing an oversupply.

“TPP is not a miracle which can change the market immediately,” he said.

In HCM City alone, dozens of high-end apartments have been marketed, while the demand is weak. Meanwhile, only 6,000 apartments for low-income earners are available.

It seems that real estate firms focus on developing high-end products in anticipation of the new foreign investment wave, while ignoring products for low-income earners which are now in high demand.

Infonet