Keep a cool head to avoid risky investment in land

The sudden increase in land investment demand makes the real estate market more exciting. Photo: Internet

Increase investment demand in "hot spots"

The economy is forecasted to be more positive by the end of this year, leading to an increase in investment demand. In Vietnam, the growth in personal equity is due to previous real estate investments or securities investments in recent years.

Many people are looking for new investment opportunities in other parts of the city, in neighboring provinces, or in new coastal locations.

Matthew Powell, Director of Savills Hanoi, said investment capital was growing in a number of industries, especially in the manufacturing sector in provincial cities.

The spike in demand for land leading to a booming market is due to better infrastructure and accessibility to new locations, roads, docks, and airports.

Emphasizing easy access to credit that encourages more people to borrow money to invest in different types of real estate, Matthew Powell said the presence of some kinds of credit in the real estate market was not necessarily a bad thing, but credit lending was expected to be controlled.

The obvious consequence of uncontrolled credit lending is that investment activities are not fully researched and referenced, creating surfing investments. With 15 years of experience in tracking Vietnamese real estate and witnessing certain market cycles, the representative of Savills said he has witnessed a number of cycles with a huge amount of speculation, especially in the housing real estate sector in Hanoi or Ho Chi Minh City.

“There are times when investors use economic leverage through short-term and long-term loans to make a large amount of short-term transactions and surfing investments. As a result, the market becomes very vibrant, but borrowers may lose their ability to repay their debts. Good credit access can boost the economy, however, this should be strictly controlled,” said the representative of Savills.

According to Matthew Powell, transactions are still heavily based on private equity, so credit activity in the market is not a concern.

Clear and prudent investment strategy needed

In fact, when opportunities appear in the market, there will be a wave of taking advantage of these opportunities to make a profit. The Savills’ expert said investors need to consider the basic factors in their investment decision.

The basic factors are: What constitutes the potential of the area? Is that a rumor? Has the official announcement about new projects in the region been announced? When will this decision be put into practice? What is the expected roadmap of the new project and the new infrastructure?

The project information can be announced early, and it takes a long time to complete. Thus, investors should pay attention to the timing and the roadmap of these announcements.

“In many cases, investments that promise rapid value addition and easy returns are not true. Investors need to keep this principle in their mind when participating in any sector of the market to avoid being wavered by inaccurate information,” said Matthew Powell.

Besides, it is necessary to pay attention to limitations when investing. Normally, investors will continuously invest when they see a profit. Investors need to understand the investment process and divestment strategy; determine whether they can afford loans or have a large enough equity to continue investing. Moreover, "investors should always keep a cool head, and have a clear investment strategy to avoid risky investment.”