Sunrise in Vietnam Real Estate

After a topsy-turvy year in Vietnam's residential real estate sector, more major issues are expected to be tackled in the coming months to stabilise one of the country's leading economic pillars.

Nguyen Hoang Hai, director general at the Ministry of Construction’s Housing and Real Estate Market Management Agency, had passed comments that the market has passed its most challenging period yet.

“In general, the market still includes some difficulties, but it is getting easier to breathe month by month, quarter by quarter, particularly in Ho Chi Minh City,” Hai said.

In the last quarter of 2023, Masterise Homes made a significant impact on the real estate market in Ho Chi Minh City by unveiling three highly anticipated projects to eager buyers. Among these releases were the luxurious Grand Marina (Saigon), the stunning Lumiere Riverside, and the modern Masteri Centre Point. These developments sparked a wave of interest and excitement in the market, drawing attention not only to Masterise Homes but also shining a spotlight on other ventures such as The Aurora, Privia Khang Dien, and Akari City from different developers. With each new project offering unique features and amenities, the real estate landscape in Ho Chi Minh City was enriched and diversified, setting the stage for a dynamic and vibrant market in the coming months.

According to the Vietnam Association of Realtors (VARS), the market has become more bustling in recent months, with many projects released for sale.

“Although we cannot confirm that the market will be brilliant in 2024, there is now a foundation for the new development cycle of the Vietnamese real estate market. The residential real estate segment, especially social housing and affordable commercial housing will play a pivotal role, leading the entire market from mid-2024,” Nguyen Van Dinh, chairman of VARS said.

Dinh expressed optimism that 2024 holds the potential for the real estate market to overcome its challenges and embark on a path of stable development. He anticipates a positive shift in the market landscape, with an overall improvement in the market outlook. As new policies take effect and the legal environment continues to evolve, developers and investors are expected to gain confidence in the market. With the potential amendment of the Land Law in alignment with the revised laws on Housing and Real Estate Business, there are positive signals indicating a brighter future for the real estate sector in Vietnam. The developments in the market in the first half of 2024 are likely to set the stage for a clearer recovery and growth trajectory in the second half of the year.

“Although new policies have yet to take effect, there are positive signals for developers and investors to be confident, especially if the Land Law will be amended in consistence with the amended Law on Housing and Law on Real Estate Business,” Dinh said.

He added that there will be some positive signals in the market in the first half of 2024, indicating a gradual recovery in the real estate sector. As market conditions continue to improve, with the potential amendment of key laws and the implementation of new policies, developers and investors are expected to gain more confidence in the market. This optimism is likely to set the stage for a clearer and more robust recovery in the second half of the year. With a favorable economic environment and decreasing interest rates, the market is poised for significant changes and growth in the upcoming months.

Economist Nguyen Minh Phong said at the forum, “The government’s strong policy, along with the gradually decreasing interest rates, will enable businesses to easily access capital, and people to pay more attention to real estate investment. From then, the market will have obvious changes.”

As of end-November, credit in the economy reached about $550 billion, marking a significant increase of 9.15 percent compared to the end of 2022. This growth in credit signals a positive trend in financial activity and investment within the real estate sector. Moreover, the current landscape sees deposit and lending interest rates experiencing a collective decrease of 2-3 percent on average compared to the previous year, with projections indicating further declines throughout 2024.

The ongoing progress in policy dismantling and the enhancement of the legal environment have been instrumental in shaping the economic outlook. The implementation of various legal documents in 2023 has paved the way for a more streamlined and efficient regulatory framework, fostering a conducive environment for real estate development and investment. This strategic focus on regulatory clarity and efficiency bodes well for the future stability and growth of the real estate market in Vietnam.

“One of the biggest problems in the market today is the legality of projects, accounting for about 70-80 per cent of all difficulties. If in 2024–2025, bottlenecks in approving projects in residential areas are resolved, the real estate market will recover,” Phong said.

The report from VARS also highlighted several positive macroeconomic impacts on the real estate market in 2024. Notably, the trend of decreasing loan interest rates for purchasing houses is expected to continue, making homeownership more accessible to a wider range of buyers. Additionally, the government's continued focus on developing social housing underscores its commitment to providing affordable housing options for the population.

Furthermore, efforts to strengthen local planning approvals are underway, with the aim of streamlining the process and promoting efficient urban development. This initiative is expected to support the timely completion of key projects and contribute to the overall stability of the market.

In addition, public investment is set to play a pivotal role in driving growth in key regions across the country. By injecting capital into strategic projects, the government aims to stimulate economic activity and create opportunities for real estate development.

Looking ahead to 2024, the market is poised for stability and a resurgence in the real estate brokerage sector, with an anticipated return of 30-40% of brokers. The residential real estate segment is projected to lead the market from mid-2024, with a significant supply of apartments expected to hit the market. Estimates suggest that over 30,000 units will be available, with a distribution of 15,000 in Hanoi, 5,000 in Ho Chi Minh City, and approximately 10,000 in Binh Duong province.

Overall, the outlook for the real estate market in 2024 appears promising, with a combination of favorable macroeconomic factors and government initiatives set to drive growth and stability in the sector.

Furthermore, these legal frameworks and policies aim to create a more transparent and efficient real estate market in Vietnam. By streamlining the legal system related to land, construction, housing, real estate business, securities, and credit, the government is laying the groundwork for a more cohesive and interconnected regulatory environment. This not only simplifies administrative procedures but also ensures that all aspects of the real estate sector are in sync, promoting a smoother and more secure investment landscape.

With the recent approval of the Law on Housing and the Law on Real Estate Business, the government is taking proactive steps to enhance the regulatory framework governing the real estate industry. By submitting the Land Law and the Law on Credit Institutions to the National Assembly for consideration and approval, policymakers are further solidifying the legal foundation for real estate development and investment. These legislative efforts signify a commitment to creating a robust and investor-friendly environment that fosters sustainable growth and stability in the real estate market.

In addition to these legal advancements, the government is also focused on addressing key issues such as land use rights, house ownership, and debt restructuring for credit institutions. By updating decrees on bond offerings, facilitating debt rescheduling, and removing obstacles to real estate projects, authorities are working to create a more supportive and conducive environment for developers, investors, and homebuyers alike. This comprehensive approach to legal reform underscores the government's dedication to promoting a thriving and well-regulated real estate sector in Vietnam.

Overall, these legislative developments, coupled with ongoing efforts to address challenges and streamline processes, are instrumental in shaping the future of the real estate market in Vietnam. By prioritizing regulatory clarity, efficiency, and investor protection, the government is paving the way for a more vibrant, resilient, and sustainable real estate landscape that benefits all stakeholders involved.

The recent wave of new legislation in Vietnam has brought about significant changes in the real estate sector, particularly in areas such as land use rights, house ownership, and other land-attached assets. These legal updates aim to provide clarity and security for investors and homeowners alike, ensuring a more transparent and efficient market environment.

Moreover, the decrees on bond offering have been revised to facilitate trading for individual enterprises in the domestic market and to enable the offering of corporate bonds to the international market. This move is set to attract more investment and funding options for real estate projects, further stimulating growth and development in the sector.

Additionally, the instructions for credit institutions and foreign branch banks on debt rescheduling and debt category retention demonstrate a proactive approach to assisting borrowers facing financial difficulties. By providing guidelines and support in managing debt obligations, these measures aim to maintain financial stability and promote sustainable growth in the real estate market.

Furthermore, a dedicated working group has been established to address and eliminate obstacles hindering the implementation of real estate projects across various localities and businesses. By actively engaging with stakeholders and addressing their concerns, the group is working towards creating a more conducive environment for real estate development and investment.

With over 130 reports received and nearly 200 real estate projects assessed, the Ministry of Construction and the working group are collaborating to review, classify, and address the identified challenges. By streamlining processes and providing targeted solutions, they aim to foster a more efficient and thriving real estate market in Vietnam.

Looking ahead, the forecast for the real estate sector includes the completion or commencement of approximately 470 social housing projects tailored for low-income individuals and industrial park workers. These initiatives underscore the government's commitment to addressing housing affordability and providing adequate housing options for underserved populations. By prioritizing social housing development, Vietnam is taking proactive steps towards creating a more inclusive and sustainable real estate landscape for all its citizens.

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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Maiden Capital. The information provided is meant as a general guide only and should not be construed as investment advice. You should always consult your financial, legal and tax advisers regarding private equity and real estate investments