How can the real estate market maintain its "throne" in attracting FDI?

The international conference "Potential for real estate market development in Vietnam" held on the morning of July 13 received many opinions on the development potential of the real estate market as well as the ability to attract foreign investment in the near future.

There are many advantages in attracting FDI capital.

Looking back at the growth period in previous years, Dr. Nguyen Van Khoi - Chairman of the Vietnam Real Estate Association, former member of the Standing Committee of the City Party Committee, former Vice Chairman of the Hanoi People's Committee shared that the Vietnamese real estate market has a strong influence on the sustainable socio -economic development of the country. At the same time, it contributes 13-15% of GDP, is related to about 40 industries, and attracts millions of workers.

"The real estate sector creates urban appearance, contributes to building the national image, attracting international friends to Vietnam and improving the quality of housing for people. However, since the end of 2022, it has encountered many difficulties, poor liquidity, and thousands of unfinished projects," Mr. Khoi shared and said that in the first 6 months of 2023, the number of dissolved real estate businesses increased by 30.4% and newly established businesses decreased by 60.4% compared to the same period in 2022.

Accordingly, the real estate market continues to face many difficulties, with poor liquidity and very limited supply; mainly due to unresolved legal issues and difficulties in accessing capital. Not to mention a number of incidents that occurred in the second half of 2022 that affected investor confidence and, in general, a number of "fundamental" problems of the market have not been resolved.

Real Estate - How can the real estate market maintain its 'throne' in attracting FDI? — Real estate is one of the sectors that attracts many foreign investors in Vietnam.

Expressing his views on the current situation of foreign investment, Mr. Nguyen Anh Tuan - Deputy Director of the Foreign Investment Department, Ministry of Planning and Investment, stated that real estate is one of the fields that attracts a lot of foreign capital inflow.

“In addition to providing important capital for the economy, the participation of foreign investors has contributed to standardizing the Vietnamese market, thereby creating values according to international standards,” Mr. Tuan affirmed.

Accumulated to date, Mr. Tuan said that the country has attracted more than 37,500 projects with a total investment capital of nearly 450 billion USD, of which investment in the real estate sector has 1,100 projects with a total investment capital of 66.4 billion USD, accounting for 15% of total investment capital - ranking second in attracting investment, after the processing and manufacturing industry sector.

According to Mr. Tuan, Vietnam's ability to attract foreign investment is due to its many advantages over other countries in the region, such as political security, stable economic growth, abundant human resources, favorable geography, etc.

However, the real estate investment environment in Vietnam also has some problems such as complicated procedures, an unsynchronized legal system, and especially recently, credit and corporate bond channels have been strictly controlled by the State.

Real Estate - How can the real estate market maintain its 'throne' in attracting FDI? (Figure 2). — Mr. Nguyen Anh Tuan - Deputy Director, Foreign Investment Agency, Ministry of Planning and Investment assessed that Vietnam's real estate market has great potential to attract FDI.

According to data from the Foreign Investment Agency, as of May 20, the total registered FDI capital in Vietnam (including newly registered capital, adjusted registered capital and capital contribution and share purchase value of foreign investors) in 2023 only reached nearly 10.86 billion USD, down 7.3% over the same period last year.

Of which, the real estate business ranked third with a total registered capital of nearly 1.16 billion USD, accounting for nearly 11% of total registered investment capital, down 61% over the same period last year (nearly 3 billion USD).

Thus, the real estate industry has lost its second place in the ranking of sectors attracting FDI capital since April this year. Meanwhile, finance and banking activities have risen to second place.

What is the "bright door" for real estate with FDI capital?

Forecasting the Vietnamese real estate market in the coming time, Dr. Nguyen Van Khoi said that the market will still be sluggish until the end of 2023. It can only recover, develop more healthily, more transparently and more standardizedly from the second or third quarter of 2024 thanks to advances in the legal environment; positive economic growth prospects.

The industrial park real estate segment is forecasted to develop in the period of 2023-2025, especially large-scale, high-quality industrial parks such as ecological industrial park models and urban service industrial parks; contributing to improving efficiency in attracting investment and sustainable development in the long term.

However, Mr. Khoi also emphasized the need to invest in external infrastructure to synchronously connect with the inside of the industrial park. In addition, it is necessary to complete legal procedures, synchronous planning and speed up site clearance.

Real Estate - How can the real estate market maintain its 'throne' in attracting FDI? (Figure 3). — Dr. Nguyen Van Khoi - Chairman of Vietnam Real Estate Association spoke at the event.

To keep up with the trend of the times and select quality FDI investors in the real estate business, Mr. Nguyen Anh Tuan shared his view that Vietnam needs to focus on solving a number of issues.

In particular, continue to review and perfect legal regulations on the real estate market, especially new types of real estate in accordance with international practices.

Proactively and selectively attract investment, targeting investors with good financial capacity and solutions associated with a green and sustainable economic transformation model; at the same time, promote investors' responsibility towards the environment and society during the investment process in Vietnam.

At the same time, urgently and flexibly manage and synchronize monetary policy tools to meet the demand for credit capital flows to serve the development of the real estate market. Create conditions for businesses, home buyers and investors to quickly access credit capital.

Continue to improve and enhance the quality of infrastructure in general and transport infrastructure in particular to create a foundation for the development of the real estate market.

At the same time, improve the attractive, competitive, and transparent investment and business environment, promptly remove difficulties and policy problems to create the most favorable conditions for investors, especially for large land-using projects that are slow to implement .

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