Real estate stocks might peak in the first half of 2019 or even earlier, in the last quarter of this year, experts have forecast.
The recovery of the property market helped boost real estate stocks during the past five years. According to financial services company Stockplus’ Fiinpro Platform, real estate stocks posted better growth than the overall market.
Statistics showed that real estate stocks increased by 143.3 per cent in the 2014-18 period while the VN-Index rose by 96.5 per cent.
Earnings per share (EPS) of real estate stocks saw stable growth in the period, despite a mild decrease in 2015. It was forecast to grow by 21.9 per cent by the end of 2018 if shares of Vinhomes Joint Stock Company (VHM), a real estate developer of VinGroup, were excluded. VHM was traded on HCM City Stock Exchange on May 17 with a market capitalisation of nearly US$11 billion.
Including VHM, the EPS of real estate stocks could jump by 72.3 per cent by the end of this year.
According to real estate services firm Savills, the real estate market has not shown any signs of crisis. However, up to 65 per cent of high-end home purchases were for investment purposes and the risks might depend on the sensitivity of buyers’ income to interest rates.
According to Stockplus, the real estate sector was largely dependent on whether the policies created favourable conditions for developers to raise capital from banks and buyers and more important, liquidity.
Credit for real estate developers saw a slowdown but for buyers saw a strong increase, which would help banks prevent risks, Stockplus said. Statistics of FiinPro Platform showed that outstanding loans for developers rose by 5.78 per cent in the first half of 2018 while for buyers saw an increase of 10 per cent.
Thus, investors should keep a close watch on specific real estate companies to make investment decisions based on the developer’s capacity, project construction progress and sale results, according to Stockplus.
Overall, experts at the FiinPro Talk 7 event held recently agreed that real estate stocks might reach their peak in the first half of 2019 or even earlier in the fourth quarter of this year.
According to Le Duc Khanh, strategy director of PetroVietnam Securities, real estate stocks might see strong division. The cash flow will focus on a few real estate stocks with bright business result prospects.
The excess of real estate supply as compared with demand, together with the tightened credit for real estate sector, were affecting the attractiveness of real estate stocks, he said.
In the remaining months of this year, real estate stocks would not be the major group which drove the market, Khanh said, adding that banking, oil and gas, and securities stocks would be more attractive.
Still, large-cap real estate stocks would have significant impacts on the fluctuations of the VN-Index, Khanh said. — VNS