Since the mid-90s, the domestic property market has had a pattern of impressive growth, brief downturn and recovery. However, the Covid-19 pandemic in the first half of 2020 negatively affected the market in an unprecedented manner. On the occasion of Savills Vietnam’s 25th anniversary, Neil MacGregor – Managing Director of Savills Vietnam looks back at the property market and the developing economy over his own 20 years in Vietnam.
1995 to 1998: Stabilizing relations with the United States and officially joining ASEAN in 1995 marked successful milestones. The transition from centrally planned to a market driven economy was establishing a robust platform for lasting change and growth. The General Statistics Office shows growth in 1995 was 9.54%, and 9.34% in 1996, correlating with per capita Gross Domestic Product (GDP) increasing from US$277 in 1995, to US$324 in 1996. Inflation was reined in from 12.7% in 1995 to 4.5% in 1996 and 3.6% in 1997. At the same time GDP growth and increased consumer confidence resulted in rising land prices, as the property market started to show signs of promise. The domestic market then entered a prolonged slowdown with the onset of the Asian Financial Crisis in 1998 impacting the nascent market economy. General Statistics Office data shows 5.76% economic growth in 1998 while inflation reached 9.2%. However, the limited market opening resulted in a proactive Government response which helped successfully manage the crisis and enable a strong foundation for future growth.
1998 to 2008: The early years of the 21st century were characterized by further economic integration. In 2001, the Vietnam – US Bilateral Trade Agreement (BTA) was ratified followed in 2006, by Vietnam becoming a member of the World Trade Organization (WTO). Back in 2000, Vietnam was considered the next ‘Asian Tiger’ economy with per capita GDP growing to US$396 USD, compared to US$328 in Laos and US$283 in Cambodia. New national economic and macroeconomic policies saw 6.79% GDP growth in 2000, up to 6.89% in 2001, followed by robust GDP growth averaging 8.23% pa from 2004 to 2007. Property market fluctuations inevitably followed. National economic indicators reflected a strong global economy, increased confidence in local economic recovery and steady increases of foreign direct capital (FDI). Furthermore, effective Government policies contributing to market performance saw land prices ramping up. Significant price growth driven by increasing transactions led to the property market becoming everyone’s favorite investment channel. However, land prices increasing significantly over the two most frantic periods of 2001 to 2003, and 2007 through 2008, started to exclude lower-income investor participation from Ho Chi Minh City and Ha Noi.
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