Land price increases impact share values of real estate companies, thus share-investment may replace current traditional investment channels.
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| Property shares investment is profitable |
In 2009, the value of most property stock value went up and had high profit. Notably, share prices of Tu Liem Housing JSC (stock code NTL) increased by 452.5% compared with early 2009.
Shares prices of Song Da – Thang Long Investment JSC (STL), Thu Duc Housing Development JSC (TDH) , Song Da Industrial Zone Urban Investment and Development JSC (SJS), Ba Ria – Vung Tau Housing JSC (HDC), Licogi 16 JSC (LCG), Cho Lon Real Estate JSC (RCL), Ho Chi Minh City Technical infrastructure investment JSC (CII), Khanh Hoi Import-Export JSC (KHA) and Hoa Binh Real Estate Construction & Trading JSC (iHBC) went up 52.97%, 230.78%, 273.27%, 392.23%, 169.54%, 291.07%, 148.13%, 150.36%, and 175.31% respectively.
According to experts, property stock have a high beta index (which is a number describing the relation of its returns with that of the financial market as a whole) strongly influencing the general market before big cycles in 2009 and the first half of the year in 2010. Despite an economic recession, property share prices went down less than the general market. Historically, these numbers step ahead and dominate the market during price increase cycles.
These kind of shares demonstrate its advantages through a possibility of strong price increases in a short time along with positive changes from macro-economic factors.
Credit expansion immediately affects investment channels, especially property and stock markets that surge property share prices. Thus, the changes of property share prices always go along with credit expansion cycles.
According to Le Chi Phuc, Investment Manager of IPA Securities Investment Fund Management Ltd Company, the “key point” of profit often occurs at the last stage when a project has been carried out for many years and its products have been traded in the market.
It’s the right time when investors often choose to invest. In addition, speculation of property products brings profit to property companies.
When land prices go up, profit of real estate companies will increase and their shares value also increases.
Thus, investors always have many options with listed real estate companies in accordance with each development period of the property market.
According to Phuc, all these above mentioned advantages pointed out opportunities for investors on choosing to invest in property shares instead of traditional property investment channel.
“Instead of searching information and conducting all purchase procedure on a property project by themselves, investors can buy shares of that property company. Its professional property developers will develop the project and do business on their behalf.” added Phuc.