How is the real estate market doing?

In the first 6 months of 2024, the Vietnamese real estate market received many positive growth signals, many segments, especially apartment products, are recovering in both supply and liquidity.

Ms. Nguyen Hoai An - Senior Director of CBRE Vietnam commented: The real estate market received signs of recovery from many factors, such as stable macroeconomic growth, FDI still maintaining its performance, while promoting real estate development, especially industrial real estate.

Besides, international tourists are returning to Vietnam after a long period of being affected by the COVID-19 pandemic, this factor is a positive driving force for the tourism industry in general and tourism real estate in particular.

“Interest rates are at a relatively moderate to low level, which is also the driving force helping the economy and real estate market grow in recent times,” Ms. Hoai An added.

Agreeing with this assessment, Ms. Pham Thi Mien - Deputy Director of the Vietnam Real Estate Market Research and Evaluation Institute said: By the end of the second quarter of 2024, the number of customers deciding to spend money to buy real estate for investment and to buy for living has grown significantly in both the primary and secondary markets, which helps the absorption rate of many projects to improve slightly.

However, according to Ms. Mien, not all segments are growing positively and there is strong differentiation. In which, the "star" of the market continues to be industrial real estate. Next is the apartment segment, this is the main segment, leading and "dominating" market liquidity.

The low-rise and land segments have also begun to show positive signs of recovery as some projects, mainly in the Central region and beyond, have recorded good sales and transfer transaction results.

The tourism and resort real estate segment alone showed more positive signs in the second quarter compared to the first quarter of 2024. However, there have not been many clear changes, although supply and transaction volume recorded a sharp increase compared to the same period.

Ms. Mien emphasized: The positive growth signals of the market in the first 6 months of 2024 are the crystallization of many strengths with the combined efforts of the Government, agencies and real estate businesses themselves.

“In the first half of 2024, the overall picture of the Vietnamese real estate market has more bright colors with clear recovery results in some segments and localities. Although the “advantages” are not strong enough to help the market “explode”, they will certainly be the premise for more impressive results in the second half of the year,” said Ms. Mien.

Put your faith in August 1st

Although each month and each quarter has seen positive growth, the recovery process is still slow and has not really broken through. The reason is that bottlenecks in mechanisms and laws are still "obstructing" recovery. Because bottlenecks in mechanisms and laws account for 70% of the difficulties that real estate businesses are facing.

However, from August 1, many bottlenecks will be resolved thanks to a series of new regulations officially taking effect, namely the 2024 Land Law, the 2023 Housing Law, the 2023 Real Estate Business Law and the 2023 Law on Credit Institutions.

Regarding this issue, Associate Professor Dr. Tran Dinh Thien, a member of the Prime Minister's Economic Advisory Group, said that the new Laws will certainly have a positive impact, contributing to promoting the recovery and development of the market.

Because the Laws were drafted in the context of a market facing difficulties and problems, the aim was to thoroughly resolve these difficulties and problems.

“In fact, the efforts to resolve the obstacles and bottlenecks shown in the recently passed Laws, although not yet meeting expectations, will certainly have positive effects,” said Associate Professor, Dr. Tran Dinh Thien.

Sharing the same view, Dr. Vo Tri Thanh - Director of the Institute for Brand Strategy and Competition Research assessed: The new Laws, when officially effective, will create a new legal corridor, removing most of the "bottlenecks" for the market when 70 - 80% of existing problems are due to legal issues. At the same time, it will create a foundation for the real estate market to develop in a safe, healthy and sustainable direction.

However, Dr. Vo Tri Thanh noted that to ensure effectiveness in the implementation process, it is necessary to speed up the completion of the Decrees on the basis of ensuring quality content and closely following the market.

Meanwhile, Dr. Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association, said: Currently, the whole country has over 1,200 projects, with a total capital of over 30 billion USD, facing difficulties due to legal problems, awaiting inspection and review.

Faced with that situation, the Government and the National Assembly have amended laws related to the market such as the Land Law, the Real Estate Business Law, the Housing Law, and the Law on Credit Institutions.

“In these revised laws, the lawmakers' viewpoint is to unify institutional regulations related to land use, avoid overlapping and conflicting laws, help investment activities and use of land resources to be clear and transparent, and focus on how to promote practical capacity,” said Mr. Dinh.

According to Mr. Dinh, the recent market difficulties are also a game-filtering process. The market only has capable businesses left. Small businesses will be forced to form joint ventures and partnerships to have enough strength to develop and survive in the market.

“When the laws come into effect, businesses will not be able to “catch a thief empty-handed”, developing projects will be much more difficult. Investors must be real players. Catching the wave and surfing the virtual wave will not be possible when the new legal regulations come into effect” - Mr. Dinh said.

Along with positive factors that can create momentum for the market to break out after August 1, new regulations also give rise to new problems, creating no small amount of pressure on businesses, especially struggling real estate businesses.

Speaking more clearly about this issue, Master Pham Thanh Tuan - Hanoi Bar Association, real estate legal expert said that the above laws still have some unresolved issues.

For example, the 2024 Land Law has new regulations that if a winning bidder is slow in compensating for resettlement support, the bid may be canceled. Or, the 2023 Real Estate Business Law is creating a new bottleneck related to the demarcation of "boundaries" when transferring a part of a project with the transfer of land use rights with technical infrastructure.

Therefore, Mr. Tuan said that with new arising issues, state management agencies need to continue to research further to improve.

Viet Vu