His world changed forever a year ago. Having saved around VND1.5 billion ($65,000), he went to his friend, a freelance realtor, to ask for advice. Buying a piece of real estate when you have some savings is a no-brainer in Vietnam.
When Thieu heard from the friend about how lucrative being a realtor could be, he was unsettled. Amid the surging property prices, Thieu’s friend had acquired a fortune of nearly 10 billion for reinvestment in just a few years.
That was almost 10 times the amount Thieu had saved over 15 years of hard work and saving. Now he too wanted a piece of that cake, quit his job and became a full-time property agent in August 2020.
After a brief decline because of Covid-19, the real estate market has started to rally once again. Data from online trading site batdongsan.com.vn shows that land prices started to increase at the end of December 2020 and began skyrocketing in February 2021.
A note from the Vietnam Association of Realtors (VAR) said land prices in places like Hanoi’s Son Tay, Hoa Lac and Ba Vi districts increased by half again in the latter half of 2020.
In early 2021, there were incredible rises in Hanoi’s districts of Dong Anh, Hoai Duc and Gia Lam, and in some areas in Quoc Oai, Thach That, and Hoa Lac they had risen five-fold in just 12 months.
Recent developments in the market have become a major topic not just for media headlines but also for enthusiastic chats between super-rich wannabes.
The profit from property is leading to a new wave of novice realtors. VAR said some 300,000 people are working as property agents with only 10 percent qualified to do the job.
Some of them used to be unemployed for a while after the economic slowdown put paid to their permanent jobs.
Almost all freelancers needed to take some risks in the beginning to raise seed money. Some took large loans from banks by mortgaging their assets, others went further and borrowed from anyone willing to lend.
But the insane commissions allayed any possible anxiety.
In this time of economic stagnation, nothing seems to be as lucrative as being a realtor, said Dang Hung Vo, a former Deputy Minister of Natural Resources and Environment.
Normally, an agent gets a commission rate of 2 percent for transactions of up to VND2 billion, which means up to VND40 million instantly, and 1.5 percent or less for those above VND2 billion.
Statistics from recruitment platform Careerbuilder.vn shows that a person working in Vietnam earns around 17 million a month. Salaries range from VND4.3-76.9 million.
After a few quick deals, in a month a realtor can earn the equivalent of many years of salaries for an average employee and more than even the highest paid employee’s monthly salary.
One newbie, Quan Tran, bragged about how real estate dealings have helped him become rich faster than any of his college friends.
When he first heard about land prices rising in Lam Ha, Lam Dong Province, he took his house ownership documents to the bank to borrow VND1 billion, borrowed another billion from his wife’s parents, quit his job as a banker, and started as a freelance realtor in Lam Ha.
Within a few months he did several transactions, selling 2000 square meters of land and earning billions of dong. Besides, he owns two pieces of land whose prices have most doubled since he bought them around half a year ago.
Recent bubbles, a cautionary tale
Since the beginning of 2021 property prices in Ha Noi, Phu Yen, Binh Phuoc, Hoa Binh, and Binh Thuan have seen phenomenal rises.
According to property consultancy Savills, globally the real estate market is slowing down but not in Vietnam, which continues to see steady growth.
According to VAR, land prices in HCMC and Hanoi increased by an average of 10 percent in the past 12 months, and by 40-50 percent in rural areas close to these cities.
“Besides the huge demand for accommodation, the vast majority of people still consider real estate the safest and most profitable asset class,” Nguyen Khac Quoc Bao, head of the Fintech Institute at the University of Economics, HCMC, said.
The Ministry of Construction said real estate prices often increase when there are rumors about infrastructure projects planned in an area. They could be new airports, roads, resorts, or golf courses.
In reality, the realtors who move first are also the most likely source of rumors, which suck the greedy and gullible in.
Most transactions are then done in an insane rush.
The bubble bursts after a few weeks as the first realtors leave. Enthusiastic investors are now stuck with the land they have bought and probably a huge loan to the bank. Even if some are willing to sell at a loss there are no more takers.
But Tran and other realtors fully expect price bubbles to occur elsewhere since after all real estate remains the most profitable asset class amid the pandemic.
Earning his first commission in Da Nang this month, Thieu said: “Quitting the office job and becoming a full-time realtor has been my best decision. I bet more and more people will join us, especially when the economy recovers and vaccination proves effective.”
Quan half-jokingly said: “Real estate is king now, much more profitable than any other business. Only drug dealing can perhaps beat it.”