Sustainable real estate development vital for market health

By Vu Pham, Huong Dung
Sun, June 18, 2023 | 1:46 pm GMT+7

Vietnam’s real estate market needs to focus on developing properties that create "real values" such as industrial and commercial real estate, affordable housing, and social housing, said Long Phan, founder and director at AFA Research & Education.

"The resort and high-end apartment segments should be limited due to low demand and high inventory," he noted. AFA is an organization specializing in training governance, financial and auditing professionals.

Phan said for a developing country like Vietnam, the real estate market is the backbone. If the market develops in a sustainable way, all players will “live well”.

"Now, the Vietnamese government’s policies are facilitating real value-creating segments, reducing consequences to the economy, increasing value-creating ability, and supporting investment attraction," he added.

A Vietnam Association of Realtors (VARS) report shows that from the beginning of 2022 to the end of Q1/2023, there was a "thirst" for supplies, especially affordable housing.

In 2022, about 48,500 properties were put on the market, just over 20% of the supply in 2018 - the year before the Covid-19 pandemic broke out. Most of them were high-end, expensive products.

In Q1/2023, the supply reached about 25,000, mainly inventory from previously launched projects, with a lack of options from new projects.

Sunrise City, a project developed by Novaland Group in District 7, Ho Chi Minh City. Photo courtesy of VietnamBiz.

Sunrise City, a project developed by Novaland Group in District 7, Ho Chi Minh City. Photo courtesy of VietnamBiz.

Demand dropped sharply as properties, mainly from existing projects, were unable to attract customers, while high deposit interest rates attracted idle money into the banking system.

“Poor supply, weak cash flow and shrinking buyer confidence caused real estate transactions in 2022 and Q1/2023 plunge,” said VARS.

The absorption rate of the whole market in 2022 reached about 39%, equivalent to 19,000 transactions, only meeting 17% of the 2018 transaction volume. The respective figures in Q1/2023 were 11% and 2,700 transactions, down 50% year-on-year.

According to VARS, property developers and investors had been in a state of "stagnation" for a long time.

"Since the beginning of 2022, the government has thrown lifelines to save the real estate market and businesses. But these lifelines have yet to drag businesses out of rough seas", the association stated, adding that without timely solutions, they will definitely "drown".

According to Bloomberg, Vietnamese builders have suspended more than 1,200 real estate projects worth VND800 trillion ($34 billion) as funding woes continue to beset the industry.

“A huge resource has been frozen and we don’t know how long it will last,” it cited the Vietnam Real Estate Association as saying. “These halted projects are not creating added value for society, leading to multiple consequences.”

Each of Vietnam’s 63 provinces and cities had suspended 20 projects on average, the Hanoi-based real estate association said. Notably, about 400 projects in Hanoi are on hold, while the number in Ho Chi Minh City is more than 300.

The property crisis, triggered by builders taking in too much debt, the Covid-19 pandemic that dampened demand, and a government crackdown on corruption, has affected more than 1,800 builders and forced 340 other companies into insolvency in Q1/2023, according to the construction ministry.

Data from Vietnam’s General Statistics Office showed that in the first five months of 2023, 554 real estate enterprises were dissolved, a year-on-year increase of 30.4%. The number of newly established enterprises in this sector plunged 61.4% over the same period to only 1,744.

The construction industry welcomed 6,745 new enterprises, down 5.7% year-on-year, but 581 firms dissolved, up 2.8%.

Comments (0)
  • Read More
Vietnam shipping, seaport stock rally driven by rosy outlook in 2025

Vietnam shipping, seaport stock rally driven by rosy outlook in 2025

Many shipping and port stocks have risen sharply since November on an optimistic outlook for the industry driven by increasing throughput and a shift in container shipping alliances in 2025.

Companies - Sun, December 22, 2024 | 10:00 am GMT+7

Singapore’s Platinum Victory seeks to raise stake in Vietnam’s REE to nearly 45%

Singapore’s Platinum Victory seeks to raise stake in Vietnam’s REE to nearly 45%

Singaporean fund Platinum Victory Pte. Ltd. has registered to buy another 16.8 million shares in Ho Chi Minh City-based utility firm Refrigeration Electrical Engineering Corporation (REE), aiming to increase its ownership to nearly 45%.

Finance - Sun, December 22, 2024 | 9:29 am GMT+7

1.8 km road connecting Lach Huyen Port terminals to be built in northern Vietnam

1.8 km road connecting Lach Huyen Port terminals to be built in northern Vietnam

The Hai Phong Economic Zone Management Board has taken a significant step forward in enhancing infrastructure around Lach Huyen Port by establishing a council to appraise the environmental impact assessment for the road connecting terminals No. 3 to No. 6.

Economy - Sun, December 22, 2024 | 8:00 am GMT+7

Hanoi TikToker internationally wanted for involving in multi-billion-dollar scam

Hanoi TikToker internationally wanted for involving in multi-billion-dollar scam

Hanoi police have issued an international arrest warrant for Le Khac Ngo, known as "Mr. Hunter," a key accomplice in a recently-dismantled massive foreign exchange and securities fraud ring.

Society - Sat, December 21, 2024 | 10:57 pm GMT+7

Unlocking Phu Quoc’s potential to become the 'Hawaii of the East'

Unlocking Phu Quoc’s potential to become the 'Hawaii of the East'

Leading global tourism companies have remarked that Phu Quoc has "yet to receive the recognition it deserves," despite its impressive and unexpected growth rate.

Travel - Sat, December 21, 2024 | 7:20 pm GMT+7

Thai central bank maintains policy interest rate at 2.25%

Thai central bank maintains policy interest rate at 2.25%

The Thai Chamber of Commerce (TCC) has said it backs the decision by the Bank of Thailand, the country's central bank, to maintain the policy interest rate at 2.25%, considering the move as suitable for a reviving economy.

Southeast Asia - Sat, December 21, 2024 | 5:43 pm GMT+7

Vietnam's military-run tech giant Viettel strikes big deals at international defence expo

Vietnam's military-run tech giant Viettel strikes big deals at international defence expo

Subsidiaries of Military Industry and Telecommunications Group (Viettel) signed a string of significant contracts with major global partners during the first two days of the Vietnam International Defence Expo 2024 in Hanoi.

Companies - Sat, December 21, 2024 | 5:36 pm GMT+7

Taiwan’s Wistron acquires 37ha land lot in northern Vietnam for expansion

Taiwan’s Wistron acquires 37ha land lot in northern Vietnam for expansion

Taiwan-headquartered Wistron, a top electronics provider and an Apple supplier, will further its investment in Vietnam’s northern province of Ha Nam by acquiring another 37.1-hectare land lot.

Companies - Sat, December 21, 2024 | 2:08 pm GMT+7

VAFIE seeks to promote sci-tech development, intellectual property policies

VAFIE seeks to promote sci-tech development, intellectual property policies

The Vietnam’s Association of Foreign Invested Enterprises (VAFIE) aims to enhance policies for the development of science, technology, and intellectual property, creating a more conducive investment environment.

Companies - Sat, December 21, 2024 | 1:59 pm GMT+7

Vietnamese dong likely to depreciate 3% in 2025: VinaCapital

Vietnamese dong likely to depreciate 3% in 2025: VinaCapital

The Vietnamese dong is likely to depreciate 3% in 2025 on anticipation that the US Dollar/DXY Index will finish 2025 nearly unchanged, says Michael Kokalari, chief economist at Vietnam's leading fund manager VinaCapital.

Economy - Sat, December 21, 2024 | 11:23 am GMT+7

First luxury railway journey across Vietnam features Indochine architecture

First luxury railway journey across Vietnam features Indochine architecture

PYS Travel has launched the first luxury railway journey across Vietnam named Sjourney, marking a new milestone in the railway tourism sector.

Travel - Sat, December 21, 2024 | 10:09 am GMT+7

Vietnam among 40 most beautiful countries: US publication

Vietnam among 40 most beautiful countries: US publication

Vietnam has secured the 36th position in the ranking of the 40 most beautiful countries in 2024 in a testament to its undeniable charm and appeal, according to US News & World Report.

Travel - Sat, December 21, 2024 | 10:04 am GMT+7

Foxconn to invest $16 mln more in Vietnam’s Quang Ninh province

Foxconn to invest $16 mln more in Vietnam’s Quang Ninh province

Competition Team Technology (Vietnam) Company Limited, a subsidiary of Foxconn, will invest an extra $16 million in its “S- Vietnam” project in the northern coastal province of Quang Ninh.

Industries - Sat, December 21, 2024 | 9:53 am GMT+7

Vietnam’s small- and medium-sized businesses embrace digitization to weather global expansion risks: survey

Vietnam’s small- and medium-sized businesses embrace digitization to weather global expansion risks: survey

While global expansion remains a key priority for the country's small- and medium-sized businesses (SMBs), achieving this goal requires overcoming challenges by leveraging the right talent and advanced technologies, including AI, according to Payoneer’s findings.

Companies - Sat, December 21, 2024 | 7:56 am GMT+7

Vietnam tax authorities collect $169 mln from delinquent taxpayers through exit bans

Vietnam tax authorities collect $169 mln from delinquent taxpayers through exit bans

Vietnam's tax authorities have collected about VND4.3 trillion ($169 million) from 6,500 delinquent taxpayers through exit ban measures so far this year, nearly five times the amount reported in the middle of the year.

Finance - Fri, December 20, 2024 | 10:29 pm GMT+7

French, Chinese EV manufacturers to invest in Indonesia

French, Chinese EV manufacturers to invest in Indonesia

Three global electric vehicle (EV) manufacturers - France’s Citroen and China’s BYD and AION - have committed to establishing EV manufacturing plants in Indonesia, Minister of Industry Agus Gumiwang Kartasasmita has announced.

Southeast Asia - Fri, December 20, 2024 | 6:42 pm GMT+7