Now that the powers of attraction are in play, Singapore property firms are courting Vietnam. Structural drivers, including rising foreign direct investment, higher disposable incomes and rapid urbanisation, could see its housing market experience similar growth to that of China two decades ago. While our proprietary survey suggests the mass segment could encounter a near-term hiatus, it confirms Singapore developers’ strong franchise among local buyers.
<strong>Opportunities to enjoy Vietnam’s economic sunrise </strong>
Vietnam is emerging as a key beneficiary of the US-China trade war as manufacturing firms realign their Asian supply chains. Combined with relaxed foreign-ownership rules, we expect to see rapid urbanisation amid rising incomes. These structural drivers should underpin a robust property market in the long term, with similarities to China’s housing market growth two decades ago.
<strong>Powering ahead of peers</strong>
Vietnam’s economy grew 7.1% in 2018, surging ahead of its Asean peers and momentum is set to continue over the next two years. Fuelled by buoyant foreign direct investment inflows, our economics team forecasts the economy to grow at 6.7% in 2019 and 6.2% in 2020.
<strong>Taking it to the streets</strong>
While property prices have been on an uptrend, prospects of rising interest rates and trade-war volatility could curtail momentum. Given the lack of granular data available, we conducted a proprietary on-the-ground survey to gauge Vietnam’s housing appetite. Our study suggests that demand among the middle class could ease near term despite most respondents taking the view that prices would trend higher. It also revealed that CapitaLand and Keppel Land enjoy a strong position among local buyers.
<strong>Sizing up the key players </strong>
We evaluate how Singapore developers stack up against two of the largest residential developers in Vietnam. Keppel Land is well placed near term given its high-end positioning and significant landbank while CapitaLand’s smaller holding could drag on its expansion ambitions. That said, the latter’s fund-management platform could scale up to deepen the company’s Vietnam presence in a relatively short timespan.