Vietnam is an attractive destination for real estate M&A activities.
PV: In recent times, a series of policies have been "taking effect," causing the real estate market to gradually improve. How do you assess the real estate landscape in 2024?
Dr. Nguyen Minh Phong: Overall, although the real estate market still faces many difficulties and the recovery is uneven across segments, in my opinion, the real estate market has overcome the most challenging phase.
The real estate market in 2024 will see positive developments in terms of both supply and demand, input and output; at both macro and micro levels, in the short and medium term, in policy as well as in operational and business practices…
Economist , Dr. Nguyen Minh Phong.
In the coming period, the impact and effectiveness of policy removal and improvements to the legal environment will be more pronounced, with a series of new draft laws such as the amended Housing Law, the amended Real Estate Business Law, and the amended Real Estate Law containing many new points.
The progress in resolving difficulties and obstacles in projects is gradually increasing. In 2023, Hanoi resolved 58.8% of the projects facing difficulties and obstacles, while Ho Chi Minh City resolved 37.2%. The projects that have been, or are being, resolved and freed from obstacles will contribute to ensuring supply and boosting the market in the coming period.
The bottlenecks in project approval for new residential developments will be resolved, and market supply is increasing. The social housing market will see brighter improvements thanks to a significant increase in supply from large-scale projects nationwide, both state-owned and private.
The industrial real estate segment will become more vibrant thanks to the implementation of infrastructure projects nationwide and increased FDI activity. The high-end commercial housing segment will recover more slowly as real demand is not expected to surge. The real estate market is and will continue to receive new impetus from the results of public investment implementation and FDI attraction. Overall, the real estate market will become more vibrant and see a surge in transactions from the end of 2024.
All of the factors mentioned above have a positive impact, increasing confidence and strength in the real estate market and spreading to more than 40 other sectors in the national economy.
PV: Many believe that the real estate market has enormous potential. In your opinion, will Vietnam become a bright spot attracting foreign investors in 2024?
Dr. Nguyen Minh Phong: The new wave of tourism recovery, with hotel performance in Hanoi and Ho Chi Minh City returning to pre-Covid-19 levels, indicates that restructuring will be more robust, and opportunities will only be available to businesses with safe, sustainable development strategies, focusing on segments that meet real demand and possessing sufficient financial capacity. Simultaneously, it will gradually eliminate incompetent businesses that operate in a short-sighted, opportunistic manner.
The years 2024-2026 are predicted to see a surge in foreign investment into the Vietnamese real estate market, especially from Asian countries such as South Korea, Singapore, Malaysia, and Thailand, as well as from Middle Eastern investors. In my opinion, investment objectives remain focused on finding clean land plots (with legal ownership and complete compensation), of good quality, with real value and development potential.
Real estate projects with scalability, aligned with domestic and regional demand trends and changes in global supply chains, will continue to attract the attention of both domestic and foreign investors. Vietnam remains an attractive destination for real estate M&A activities, as Vietnamese legal regulations allow the sale of unfinished real estate projects (whereas this is not possible in other countries).
The potential for industrial, residential, and hotel real estate is enormous. Industrial real estate M&A activities will see increased opportunities linked to the benefits offered by numerous free trade agreements (FTAs), as well as the extensive infrastructure and supporting industries, the seasoned experience, and the knowledge of the Vietnamese market that domestic businesses bring to partnerships with foreign partners.
The market for high-end, green-certified office spaces maintains high occupancy rates and stable rental price growth, further increasing their attractiveness in the real estate M&A market.
Overall, while always offering attractive opportunities, the real estate M&A market in particular, and real estate business in general, is not a field for all investors. I believe that success only comes to businesses that possess the ability to assess and analyze the market and have solid financial resources.
Expedite the process of removing administrative procedural obstacles.
PV: Although the real estate market has many opportunities for breakthroughs in 2024, it still faces difficulties and challenges. In your opinion, what are the solutions to help the real estate market develop healthily and sustainably?
Dr. Nguyen Minh Phong: In the coming period, more efforts are needed from all stakeholders, especially businesses, to regain consumer confidence, improve the imbalance between segments, and unlock cash flow from various sources, including the bond market and customer prepayments.
The real estate market is showing signs of recovery (Illustrative image).
To alleviate market difficulties, the State Bank of Vietnam needs to strictly implement the Prime Minister's directives from the December 7, 2023 meeting on removing credit capital difficulties for businesses. Accordingly, attention should be paid to: significantly reducing lending interest rates; continuing debt restructuring; improving conditions for new loans; increasing management and eliminating bad debts caused by speculation and fraud; and continuing fiscal policies related to capital, taxes, fees, and public investment to support monetary policy…
In particular, localities need to expedite the preparation and approval of planning schemes, which will serve as the basis for implementing real estate projects; publicly disclose the list of real estate projects that require the selection of investors through bidding so that businesses can fully understand the information, proactively research, and register to participate in an open and transparent manner…
Continue to expedite the removal of administrative obstacles related to real estate projects; strengthen inspection and supervision to avoid causing difficulties and inconvenience in resolving administrative procedures for businesses and citizens. Increase the authority of provincial People's Committees to issue policies and mechanisms for the development of social housing that are appropriate to local realities.
Real estate businesses need to restructure their product segments and pricing; improve project quality and strengthen investor confidence. At the same time, businesses should boost capital raising through corporate bond issuance on the stock market.
Interviewer: Thank you for the interview!
N. Giang
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