Brian Jeffrey
Recent positive trends in Vietnam’s real estate sector suggest recovery, although significant hurdles continue to impede swift progress.
The market is gradually gaining strength, especially in the affordable housing sector, yet persistent legal and tax challenges complicate its journey to stability.
During the seminar titled “Evaluating the Real Estate Market Towards Late 2024 and Early 2025,” organized by Nguoi Lao Dong newspaper on October 10, Vo Hong Thang, Deputy General Director of DKRA Vietnam, shared optimistic data from Q3. Approximately 18,000 housing units were made available, with a notable surge in demand for affordable homes.
In Ho Chi Minh City, apartments priced under 60 million VND/m² and land plots in nearby Binh Duong at about 30 million VND/m² are gaining traction. Additionally, the secondary market for apartments has seen price increases of 5-9% year-over-year.
Mr. Thang noted that the land segment introduced over 9,000 new plots in Q3, a 17% rise from the same period last year. He anticipates that parcels with clear legal status in established urban areas will remain scarce, with a predicted consumption increase of over 30%.
However, these encouraging trends do not negate the persistent challenges. Mr. Thang pointed out that the resort property sector is still struggling due to unmet profit expectations from the past, lingering effects of the pandemic, and ongoing legal issues, stating, “This market segment will need additional time to recover and stabilize.”
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, remarked on the city’s real estate market showing signs of improvement from its previous low but still grappling with several challenges.
Over the first nine months of 2024, the market experienced growth between 6-7%, demonstrating a clear recovery, yet housing supply remains extremely constrained. Only nine new projects were sanctioned in the first eight months, with many being small-scale developments; the largest covering just 5 hectares.
A significant concern is the steep rise in housing prices, limiting access for many buyers. Mr. Chau noted that “Housing prices have escalated by 15-20% due to market dynamics amid limited supply.” He advocated for enhanced support for workers through regular assessments and potential updates to rental policies within the Housing Law.
Dr. Su Ngoc Khuong, Senior Director at Savills Vietnam, shared his views on foreign investors during the seminar, pointing out the challenges they encounter when trying to enter the real estate markets in major cities like Ho Chi Minh City and Hanoi.
He expressed that “While the foreign investment potential is large, accessibility remains a challenge unless involving projects that completed legal processes 5-7 years prior.”
Even though foreign investors are keen on the industrial real estate sector, Mr. Khuong emphasized that “there are limited avenues in the housing market.” Legal complexities and difficulties in securing land have led many to shift their focus to infrastructure and industrial park ventures instead.
Nonetheless, numerous experts continue to express optimism about the long-term growth potential of the real estate market, identifying several factors that could drive its recovery. Mr. Pham Lam, Vice Chairman of the Vietnam Real Estate Brokerage Association, highlighted the importance of clear regulations, development of infrastructure, new financing avenues, and stable credit to enhance market conditions.
“The government is dedicated to advancing infrastructure projects, particularly in the northern and southern regions. This will be key to connecting various areas and invigorating the real estate landscape,” Mr. Pham Lam noted.
Currently, while signs of recovery are evident in the real estate sector, achieving sustainable growth will depend on maintaining a stable macroeconomic environment, restoring consumer trust, and addressing lingering legal concerns. Authorities in Ho Chi Minh City and across the nation are working to alleviate challenges in this field, which is essential for the advancement of many interconnected industries.
