Is the Vietnamese real estate market ready to re-enter the market?

On the afternoon of April 15th, the Vietnam Association of Real Estate Brokers (VARS) held an event to announce the Vietnam Real Estate Market Report for Q1/2024 and forecast for Q2/2024.

In his opening remarks, Mr. Tran Van Binh, Secretary General and Vice President of VARS, noted that the real estate market in the first months of 2024 has overcome its most difficult period and is currently and will continue to see positive developments in overall supply and demand, both input and output, at both micro and macro levels, in the short and medium term, in terms of policies and operational and business practices, opening up promising opportunities for the real estate market in 2024.

Evidence and basis for this optimistic forecast are the results regarding the total FDI investment in real estate business activities, the number of newly established businesses and those resuming operations in the market in the first quarter of 2024. The recorded transactions in the market are also showing a continuous increase in scale over time.

Real Estate - Is the Vietnamese real estate market ready to re-enter the market? — Mr. Tran Van Binh - General Secretary and Vice President of VARS.

On the government side, Mr. Binh stated that ministries and agencies continue to demonstrate a positive and strong commitment to accelerating the recovery process of the real estate market, with more than 10 actions taken. In March 2024 alone, there were two consecutive important meetings to address difficulties in the real estate market and production and business activities.

VARS leaders believe that on July 1st, 2024, when some regulations in the Law officially come into effect, it will certainly create a boost that will propel the recovery process of the real estate market to a new, higher and more significant level compared to the past.

"The recovery process of the Vietnamese real estate market is becoming increasingly clear and optimistic, with ample room for even more brilliant development. The real estate market will soon return to normal with increasingly transparent and clear information for all economic sectors participating in this field," Mr. Binh affirmed.

The market has all the elements for a real estate recovery.

Citing information from the report, Ms. Pham Thi Mien - Deputy Head of the Market Research and Investment Promotion Consulting Department - stated that in the first quarter of 2024, many real estate projects simultaneously commenced construction, with scales reaching tens of thousands of hectares and billions of USD. Many real estate businesses have also begun to prepare for launching their projects.

The real estate market in Hanoi and its surrounding areas is becoming more vibrant with a sharp increase in transactions, driven by both investment and residential demand. Apartments priced under 3 billion VND and houses in alleyways around 4 billion VND in the inner city are in high demand.

Meanwhile, land prices have stopped falling. Land plots priced under 2 billion VND in suburban areas, provinces, and cities, with guaranteed legal status and existing infrastructure and amenities, have recorded price increases of up to 40% compared to the most difficult period of the market.

In Ho Chi Minh City and surrounding areas, the land plot segment did not experience significant fluctuations in the primary market. However, liquidity in the secondary market improved, focusing on products with completed infrastructure and legal documentation, with prices increasing by approximately 3% compared to Q4/2023.

Regarding apartment supply, there was a slight decrease compared to the previous quarter, but liquidity also improved significantly. The townhouse and villa segment recorded a price increase of approximately 2% - 4% in the secondary market compared to the end of 2023.

Real Estate - Is the Vietnamese real estate market ready to re-enter the market? (Figure 2). — Many real estate businesses have begun to prepare for their product launches.

Assessing the vibrancy of the real estate market in the first quarter of 2024, Ms. Mien believes that the current real estate market possesses all the necessary elements to serve as a springboard for recovery, with support from higher levels of government, key foundations from three laws that have the greatest impact on the market, the determination of stakeholders, and the increasingly strengthened confidence of customers/investors.

However, all these factors are still in the process of interacting, and we need the appearance of a "catalyst" to "create a reaction" that will produce the final results.

Nevertheless, the market has also seen noteworthy results, with a series of large-scale projects ranging from hundreds to tens of thousands of hectares, and even billions of USD, being announced and proposed for investment; more new projects, launching for the first time on the market; and developers actively revitalizing existing projects to further stimulate the market.

Common features of projects launched during this period include sound legal documentation, significant investment in infrastructure, landscaping, and amenities, along with attractive incentive policies to increase their persuasiveness with customers/investors.

"The first quarter of 2024 is considered a 'gentle stepping stone' for the market to maintain its momentum before jumping to a new stage with expectations of a clearer recovery in the following quarters," Mr. Mien commented.

The real estate market is developing in a positive direction.

Regarding the real estate market forecast, Mr. Le Dinh Trung - Member of the VARS Market Research Task Force, General Director of SGO Homes, said that in the coming period, macroeconomic policies will continue to impact the real estate market.

Specifically, the Government and relevant agencies, ministries, and sectors will continue to strive to finalize and issue the Decree detailing the implementation of the Housing Law, the Land Law, and the Real Estate Business Law as soon as possible. Bank interest rates will continue to remain stable at a low level.

The government will also continue to push for the removal of obstacles and the development of the social housing segment. New initiatives will become increasingly thorough and targeted. It will continue to promote local planning, focus on disbursing public investment, and create momentum for socio-economic development. Compared to the previous period, investors will spend more time considering their investment decisions to "ride the wave" of infrastructure development.

Meanwhile, the expert suggests that maturing funds at banks are beginning to seek investment channels that offer more attractive returns, including real estate, especially land plots with relatively low investment costs and significant profit potential.

Real Estate - Is the Vietnamese real estate market ready to re-enter the market? (Figure 3). — Mr. Le Dinh Trung - Member of the VARS Market Research Task Force, General Director of SGO Homes.

With the aforementioned efforts, Mr. Trung believes that the recovery process of the real estate market continues to progress in a positive direction. Any changes will occur gradually and steadily, based on the previous recovery and accumulation momentum, along with support from economic growth and urbanization.

The recovery results remain segmented by market and region, similar to Q1/2024.

“After surviving a near-fatal illness, the remaining entities will develop ‘antibodies.’ Capital from other channels will likely flow back into the real estate market in greater quantities and with easier access. The number of entities ready to re-enter will increase,” Mr. Trung explained, using an analogy .

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