FDI capital flows into Vietnam's real estate market continue to grow

According to One Housing's report, Vietnam continues to maintain impressive growth momentum with GDP growth in the first 9 months of 2024 at 6.82%, which has created conditions for the real estate market to continue growing.

In fact, FDI capital flows into Vietnam’s real estate market continue to grow. Specifically, total FDI capital realized in the past 9 months reached 17.3 billion USD, up 8.94% over the same period last year.

Of which, real estate ranked second in total registered FDI with a total investment capital of nearly 4.4 billion USD, accounting for 17.7%, doubling in 2023.

“The significant increase in FDI not only promotes economic growth but also has a positive impact on the real estate market, creating great demand for offices, housing and other types of real estate,” One Housing said.

According to the survey results of the Vietnam Economic Forum (VBF), more than 50% of businesses participating in the survey rated Vietnam as one of the top 3 most attractive destinations for investment activities.

Notably, 59% of foreign enterprises expressed confidence in investment commitments, while 54% of enterprises already present in Vietnam affirmed that they will continue to expand their operations. This shows that Vietnam is increasingly attracting more foreign investors.

Bond maturity pressure increases in the fourth quarter

Although the Vietnamese real estate market has grown over the past year and some channels for capital inflow into the market have improved, there are still certain challenges.

Specifically, monetary policies were loosened, thereby stimulating credit growth. In July 2024, M2 money supply (transaction money supply) continued to grow, up 12% compared to last year.

This allows banks to reduce interest rates and stimulate lending and investment activities.

Credit growth in the first 9 months of 2024 reached 8.5%, higher than the same period in 2023 (5.7%) and real estate credit increased by 9.15% compared to the end of 2023.

This result is thanks to the SBV (State Bank of Vietnam) reducing the lending interest rate level, creating conditions for businesses to access capital from the end of the second quarter of 2024. According to SBV, the credit growth target of 15% can be achieved by the end of 2024.

Domestic commercial banks continued to reduce preferential lending rates to 6.62%. Meanwhile, deposit interest rates increased slightly to 5.24%. The reduction in preferential lending rates helped boost demand for loans and real estate investment.

Meanwhile, the total value of corporate bond issuance in the first 9 months of 2024 reached more than VND 277 trillion, of which the real estate industry accounted for 19%.

However, One Housing believes that many large investors are facing pressure to mature bonds in the fourth quarter of 2024. In the fourth quarter of 2024, it is estimated that nearly VND 80,000 billion of bonds will mature, of which the majority (44%) are real estate bonds with VND 35,100 billion.