Seize the opportunity to "turn things around".

Real estate in 2023: Rising from the bottom.

The real estate market has experienced a difficult and challenging year. After two years of uncertainty due to the Covid-19 pandemic, the real estate market is expected to soon recover and see active transactions similar to the pre-pandemic period.

However, a series of issues stemming from the business environment, capital sources, legal frameworks, land availability, etc., have resulted in the real estate market in 2023 not performing as well as expected.

In a thematic report titled "The Current Health of the Vietnamese Real Estate Market," published by the Vietnam Association of Real Estate Brokers (VARS) in June 2023, the association compared current real estate businesses to "people on the verge of drowning," stating that despite efforts to gradually eliminate factors that reduce their weight, they still lack the strength to "survive."

At the same time, the report also predicted that if the difficulties continue, about 23% of real estate businesses will not be able to maintain operations until the end of the third quarter, and only about 43% will be able to survive until the end of 2023.

To date, the figures have gradually revealed the bleak reality of the market. According to data from the General Statistics Office, in the first 11 months of 2023, the whole country saw the establishment of 4,312 new real estate businesses with a total registered capital of VND 247,054 billion, equivalent to only 52.6% and 57.1% compared to the same period last year.

Meanwhile, the number of businesses that have completed dissolution procedures is 1,160, representing a 107.3% increase compared to the same period last year. Regarding attracting foreign investment into the real estate market, as of November 20th, the real estate sector attracted over $2.87 billion in FDI, a decrease of 31.4% compared to the same period last year.

Real Estate - Real Estate 2024: Seizing the opportunity to — Mr. Nguyen Van Dinh – Chairman of the Vietnam Association of Real Estate Brokers (VARS).

Sharing his thoughts on the situation with Nguoi Dua Tin , Mr. Nguyen Van Dinh - Chairman of VARS - said that he was "very saddened" to witness a series of businesses and real estate brokers leaving the market in the first two quarters of 2023.

"By the third quarter of 2023, although the health of real estate businesses showed more positive signs, on average, more than 100 businesses still left the market each month," Mr. Dinh said.

Citing a report by VARS, Mr. Dinh stated that by the end of 2023, up to 70% of real estate brokers had switched professions or left the industry recently. Previously, the number of real estate brokers working in this field reached approximately 300,000. However, due to the impact of market fluctuations, only about 100,000 remain active.

Businesses must find opportunities for themselves in adversity.

Dr. Can Van Luc - Chief Economist of BIDV and Director of BIDV Training and Research Institute, and Member of the National Financial and Monetary Policy Advisory Council - stated that in the final months of the year, the National Assembly passed the 2023 Housing Law and the amended Real Estate Business Law, and the amended Land Law may be passed in 2024.

"This is unprecedented, with all three important laws related to the real estate market being passed almost simultaneously. This will certainly create significant changes," Mr. Luc commented.

However, Mr. Luc believes that the real estate market will still face many potential challenges in the coming period, such as a slight global economic downturn and slow growth, which will directly affect a country like Vietnam that is strongly opening up and integrating into the global economy.

Although interest rates have decreased, they remain essentially at high levels, increasing risks in international financial and monetary markets, negatively impacting the domestic market.

Meanwhile, disbursement of the 2022-2023 recovery program and public investment is currently uneven, and real estate businesses are still mired in difficulties related to legal issues, cash flow, and personnel.

Furthermore, the risks in the corporate bond market – a powerful source of capital supporting the real estate sector – still require considerable time to address and stabilize. Even so, the corporate bond market is unlikely to recover quickly, with approximately 23 trillion VND of bonds maturing in 2024.

Accordingly, Mr. Luc believes that in the current context, real estate businesses must "accept" and "be determined".

Firstly, accept lower real estate prices, diversify capital sources, expand markets and segments to reduce risks, and proactively approach and implement relevant laws (land, housing, real estate business, etc.).

Secondly, we are determined to restructure personnel, control cash flow risks, interest rate risks, exchange rate risks, and prepare specific, feasible plans for corporate bonds maturing next year.

Looking ahead, VARS Chairman Nguyen Van Dinh believes that in 2024, the real estate market is expected to open up many new opportunities as existing fundamental issues are resolved.

Therefore, real estate businesses need to quickly seize opportunities and proactively monitor market developments to adapt at the right time.

Looking ahead, Mr. Dinh commented that real estate prices will increase at different rates in different regions and markets, mainly depending on the supply-demand balance, but the market will certainly show more signs of "warming up".

"Since the third quarter of 2023, the real estate market has shown many encouraging signs, thereby creating momentum for the real estate market in the fourth quarter of 2023 and the first quarter of 2024 to have a clearer opportunity for recovery," Mr. Dinh observed .

Vigorously promote the safe and healthy development of the real estate market.

In Official Dispatch No. 1376 dated December 17, 2023, Prime Minister Pham Minh Chinh directed the Ministry of Construction to resolutely handle cases causing inconvenience and delays for real estate businesses; requested the State Bank of Vietnam to continue researching and developing feasible solutions to effectively implement the VND 120,000 billion credit program; the Ministry of Natural Resources and Environment to continue perfecting the amended Land Law, immediately establish specialized working groups to urge and guide localities in resolving obstacles; and the Chairmen of the People's Committees of provinces and centrally-administered cities to direct relevant agencies to focus on further accelerating the progress of investment procedures, and will be held accountable to the Prime Minister if delays occur in investment projects…

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