Foreign organizations and individuals will not be allowed to own houses attached to land if an amended draft Housing Law is approved by the parliament in November this year.
Hoang Hai, director of the Housing and Real Estate Market Management Agency under the Ministry of Construction, said the ministry had removed the proposed rule that would have allowed foreign organizations and individuals to own homes attached to land from the draft amended Housing Law after taking into account feedback from the Standing National Assembly Committee.
Since the 2014 Housing Law took effect on July 1, 2015, foreigners with legal entry have been able to buy and own apartments or detached houses in commercial projects for a maximum period of 50 years, which could be extended if needed, except in defense and security protection areas. But under the Land Law, foreigners cannot own the land on which the homes stand, which is why foreigners have opted for apartments.
"The Ministry of Construction has proposed the government allow foreigners illegally entering Vietnam to buy and own homes in Vietnam, including detached houses and apartments as specified in the draft amended Housing Law the ministry compiled," Hai told a conference themed "Development potential of Vietnam's real estate market" in Hanoi on Thursday.
The event was organized by the Department of International Cooperation, the Housing and Real Estate Market Management Agency (both under the construction ministry), The Investor (www.theinvestor.vn), and Nha dau tu (www.nhadautu.vn).
To date, 3,053 foreigners have bought homes in Vietnam, mostly apartments, while another four million or so, including overseas Vietnamese, want to buy property in the country, according to Hai.
Prof. Dr. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, urged regulators and lawmakers to promptly resolve the problem. Vo said he supported the idea of allowing foreign organizations and individuals to buy homes attached to land.
"The truth is some people think it would help expand the Vietnamese real estate market. But my care is the fact that Vietnam is in critical need of high-quality personnel, and one suitable source is foreigners working in Vietnam.
"To achieve that aim, foreigners must have a good life here, which means they must be allowed to buy homes," Vo argued.
“Foreigners working in Vietnam need to own a house to live in but they have doubts about land ownership. That’s why they select apartments,” he added.
Prof. Nguyen Mai, chairman of the Vietnam Association of Foreign-Invested Enterprises (VAFIE), argued that a foreigner invests $500 million in constructing a hotel with land use rights spanning 50 years, and when he/she transfers it to another, it includes the land use right.
"Meanwhile, a house worth several hundred thousand U.S. dollars is subject to huge discussions about whether foreign buyers can buy homes attached to land," he told the conference.
"We (VAFIE) have said many times that a favorable environment does not merely include incentives. A favorable environment is one favorable for foreign investors and their experts to live," he added.
Market recovery in 2024
At the conference, Nguyen Van Khoi, chairman of Vietnam Real Estate Association, said he expected the real estate market to recover and develop in a healthier and more transparent way from the second or third quarter of 2024.
He said the expectation was based on legal improvements, positive economic growth prospects, synchronous and modern infrastructure development, digital transformation and the application of Industry 4.0 technology, along with the availability of diverse financial resources.
Nguyen Manh Ha, vice chairman of the association, also said that he expected market recovery to start in the middle of next year, cautioning that several challenges, including the current credit crunch, needed to be overcome.
Prof. Nguyen Mai, chairman of the VAFIE, said Vietnam was still a popular investment destination for MNCs and therefore, the property market would see signs of recovery in the near future. However, in terms of luring FDI, India and Indonesia have more advantages than Vietnam now.
“Vietnam must continue to improve its business environment strongly because India and Indonesia are already more attractive to foreign investors. Vietnam must show specific actions, not just speech, by rapidly offering specific incentives to investors,” he said.
“Opportunities still exist for Vietnam. They would be bigger if we act more promptly.”
Major polluter
Joseph Low, president of Keppel Land Vietnam, part of Singaporean conglomerate Keppel Corporation, said Vietnam’s real estate sector needed to go green and embrace approaches towards a sustainable property market.
“In my opinion, the real estate industry has a big part to play on this matter because when we look at the annual carbon dioxide emission, the sector generates about 40% of the global emissions.
“In this, operational carbon, which is carbon emitted once a building is in use, is responsible for almost 70% of total carbon emitted by the sector,” he said, adding that the remaining 30% of real estate carbon footprints were created by embodied carbon emitted during the construction and decommissioning process of a building’s lifecycle.
On this matter, Keppel was in full alignment with the Vietnamese government as the corporation aimed to provide sustainability-related solutions to help customers and communities reduce their carbon footprints, he said.
Keppel is currently pioneering a sustainable urban renewal initiative to retrofit, future-proof and extend the lifespan of older commercial buildings in the country, the Keppel Land Vietnam president said.
“But for such green initiatives to gain traction across the entire industry in Vietnam, it has to be driven by compelling reasons or incentives.”
The Singaporean also highlighted several challenges in Vietnam.
“The housing supply is stifled by multi-faceted challenges such as liquidity crunch, opaque and complicated project approvals. If left unresolved, these issues would heighten market uncertainties, leading to increased cost of construction and ultimately result in higher housing price for the people in Vietnam.
“We do see that that the government is trying to streamline and accelerate the approval process, but the key is to ensure that such efforts continue to minimize the gap between the demand and supply of housing needs.”
Low made some suggestions for renovating old buildings in Vietnam. “If the government can commence a study to review the redevelopment process and introduce incentives such as bonus development area within old sites, it would encourage developers to rejuvenate the old buildings.”
Government to government cooperation
Hwang Sung Kwan, a manager with the state-run Korea Land and Housing Corporation (LH) in South Korea, said government-to-government (G2G) cooperation can address some problems facing Vietnam’s real estate industry.
“Based on South Korea’s urbanization experience, a bilateral partnership between the two countries will be an answer to urbanization problems in Vietnam where this progress is taking place rapidly,” he said.
Hwang said this cooperation would require the involvement of local governments in infrastructure development and technology development. Funding would also be needed for mainstream developers.
Hwang said LH was working with Vietnamese partners to respond to the country’s major social housing demand, which included houses for those who work at industrial parks.
Deputy Construction Minister Nguyen Tuong Van said that the ministry was committed to working with Vietnamese and international businesses in promoting sustainable development of the Vietnamese real estate market.
“I highly appreciate this important workshop and consider it a practical activity in exchanging international experiences in order to improve policies and help the market develop in a safe, healthy and sustainable manner to make contributions to the economy.”