The recent devaluation of Vietnamese currency poses limited impact on property market as it is dominated by domestic supply, according to a report by property service firm CBRE Vietnam on Thursday.
With supply by foreign developers only accounting for less than 10 percent, impact of currency movement to prices would be limited. Prices would be affected however when currency devaluation creates pressure on inflation, the report reads.
Historically, it is observed that property prices have been affected by property supply and demand more than currency movement. The Vietnamese dong (VND) has depreciated between -0.9 percent to 5.8 percent per year in the past 5 years, while residential prices in capital Hanoi have moved between -11 percent to 13 percent per year.
Properties is traditionally a favorite channel in investment value holding in Vietnam, as compared to gold, stocks, currency, or bank savings, especially amidst market uncertainty. Foreign buyers might be less affected by a cheaper VND, as Vietnam's properties, even before the recent devaluation, were considered attractive for relatively lower prices and higher yield, compared with neighboring markets such as Thailand, Singapore, and China's Hong Kong, according to the report.
Foreign buyers at this stage are more interested in what and how they can buy, rather than prices, two months after the revised Law on Real Estate Business and Housing Law took effect which allowed foreigners to own house in Vietnam.
The report assessed that if Chinese currency is further devalued, Vietnam will only see limited impact on the real estate sector as China has invested in Vietnam mostly in manufacturing, mining and infrastructure.