Construction industry doubles real estate

Fourth quarter GDP was pulled by construction and services. However, the detailed data quality of the two groups above needs to be reviewed.

Construction increased, but was it real? According to the General Statistics Office’s report, gross domestic product (GDP) in 2019 reached 7.02% – exceeding the target set by the National Assembly from 6.6 – 6, 8%. Particularly in the fourth quarter, GDP increased by 6.97%, lower than the third quarter (7.48%) and the first 9 months (7.04%). The SSI analysis center said that the deceleration in the fourth quarter came from agriculture and industry, while construction and services pulled overall growth. Specifically, construction increased 10.32% and services increased 8.09% in the fourth quarter, the highest level in many years.

Construction GDP in the fourth quarter increased by 10.3%. As the 4th largest value industry in the economy, the growth of the construction industry is important in promoting overall growth. According to Mr. Nguyen Duc Hung Linh, Director of the SSI Analysis Center, the data from the General Statistics Office on the construction industry is no longer detailed, so it is not possible to further analyze the growth components. However, the cement and iron and steel consumption data from the Association give a contrasting picture.

Specifically, according to the Steel Association, domestic steel consumption in the first two months of the fourth quarter was 3.2 million tons, up 3.7% over the same period, lower than the increase of the second and third quarters of 20%. and 8.4%. According to the Cement Association, domestic cement consumption has shown signs of slowing down from the second half of the year. Cement consumption for the domestic market in 2019 is estimated to increase only 1% compared to 2018 (in 2017 and 2018 increased by 3% and 9% respectively).

Real estate industry grows modestly

According to statistics, real estate business in the fourth quarter increased by 4.87%, pulling the whole year up by 4.6%, higher than 2018’s 4.3%. Thus, the growth rate of real estate business is less than half that of construction growth. In fact, 2019 can hardly be considered a prosperous year for the real estate market because legal problems have reduced new supply while safety regulations have been tighter than credit sources. real estate lending.

Service tourism increased unexpectedly

Services achieved impressive growth in the fourth quarter thanks to large sectors such as wholesale and retail, which increased by 9.82%; finance, banking, insurance increased by 9.26%; transportation and warehousing increased by 10.86%; accommodation and meals increased by 7.4%. Although this is an impressive growth rate of these industries, according to experts, it is necessary to carefully consider the reliability of some component figures.

As for the wholesale and retail industry – this is the group with the largest proportion in the service sector (accounting for 25%) and the third in GDP (accounting for 10%), so the rapid improvement of this industry group also has significant consequences. similar to the construction industry.

The wholesale and retail GDP increased strongly, but the retail sales index (excluding inflation) at the end of the fourth quarter only stood at 9.2%, equivalent to 9 months and lower than the same period of 9.4%.

An optimistic signal in the service sector is the growth of the accommodation and food industry, which corresponds to the rise of tourism.

The number of international visitors to Vietnam has clearly improved in the second half of the year thanks to the return of Chinese tourists. This is a good premise to maintain high growth when entering 2020. The opening of new routes clearly has positive results to attract Japanese, Taiwanese, and Thai tourists. In contrast, the visa-free policy with some European countries is not enough to accelerate the number of visitors from this region.

The real estate industry is expected to still grow in some segments in 2020

According to experts, the real estate industry and tourism services have a close relationship. The strong growth of the service industry will lead to the excitement of the real estate market in 2020.

Mr. Matthew Powell, Director of Savills Hanoi, said that Vietnam is currently one of the real estate hotspots in the region. With huge potential, macroeconomic outlook and constant investment in infrastructure, this market is growing strongly across many different real estate segments.

In 2020, the retail segment has many growth opportunities due to consumer optimism. The increase is about 12%/year due to better consumer confidence. Along with that, the shopping centers will be the traditional group with a significant contribution, about 140,000m2 will be put on the market. Along with that, the 5-star hotel will thrive because the F1 race is an opportunity to increase the number of visitors to Vietnam in the short term. Therefore, the hotel industry must pay attention to the story of how to meet this demand.

Especially, along with the development speed of the tourism industry, resort villa products continue to be sought after. But people and investors will also look to branded management units to secure their assets.

In addition, the trend of M&A blooms when the demand from Pacific investors is growing. More and more individual and institutional investors are also coming to Vietnam with large capital inflows.

However, real estate should not be expected to grow significantly, but need to be adjusted. Because growth is slower but more sustainable, it is better to have purification.

Source: Realtimes.vn