Legal bottlenecks stall 1,200 realty projects in Vietnam

Legal problems have stalled about 1,200 real estate projects across the country and possible solutions are being reviewed for around 500 of these, an industry leader has said.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors (VARS), said the situation has caused a temporary supply shortage. The majority of existing property products are either unaffordable or do not meet buyers’ needs in other aspects, he added.

“With the gradual effect of market-boosting policies and mechanisms, the real estate market will gain momentum in the coming time. Stronger customer confidence will help improve supply from projects that have their hurdles removed.”

The expert reckons that recent “positive” amendments to the Laws on Housing and Real Estate Business made by the parliament last month will also lend a helping hand in improving the situation.

The undersupply issue has worsened because Ho Chi Minh City authorities have approved very few projects over the last three years, according to the HCMC Real Estate Association (HoREA).

HoREA data shows that seven projects received the green light from the city administration in 2021. In 2022 it was just two projects and just two have been approved in the first half of this year.

As a result, just 13 developers, half the number in 2022, launched a combined 15,020 apartments for sale in the first three quarters this year; and these were mostly high-end ones.

The number of housing projects and products on offer since 2020 has decreased significantly compared to 2017, which was a prime year for the market in the last decade with developers of 92 projects introducing 42,991 units to the market.

In a move to stimulate supply, a task force that the HCMC administration established in May has helped clear obstacles for 17 property projects. Of these, three notable are: the Song Viet Complex project of Quoc Loc Phat Company; a social housing project of VTHouse Company and Tam Giao JSC; and a project of the Suntory Pepsico Vietnam Beverage Company.

Market observers say that the process of removing hurdles for real estate projects has yielded limited results due to long-standing problems including weakened financial health of property firms and officials’ fears of making mistakes.