Vietnam real estate sector may start revival in H2, continue through 2026: broker

Vietnam’s real estate market could start recovering in the second half of this year and continue to revive until 2026, driven by new real estate laws and lower mortgage rates, says a report by Shinhan Securities Vietnam.

New housing supply in both Hanoi and Ho Chi Minh City grew significantly in the second quarter of this year compared to Q1, the report on the local real estate sector’s H2 outlook shows.

In HCMC, 1,200 new apartments were put up for sale in Q2, 2.4 times that of Q1, mostly from the next phases of the Aurora và Eaton Park projects.

In Hanoi, the figure was 8,500 units, 3.6 times that of Q1, primarily from the Vinhomes Ocean Park and Vinhomes Smart City projects. Notably, the number of apartments sold in Q2 was nearly equal to the total sales in the whole of 2023.

Shinhan Securities cited market research agency DXS-FERI as saying the absorption rates in both Hanoi and Ho Chi Minh City substantially improved in H1, at 65-70% (up 4.5 fold year-on-year) and 45-50% (up 2.5 fold), respectively.

The real estate sector remained the second-largest recipient of foreign direct investment (FDI) among industries in the first seven months of this year, attracting $2.87 billion, or 16% of the total registered FDI. It ranked behind manufacturing-processing, which received $12.6 billion.

Real estate credit has not kept up with the overall upward trend in overall lending for the economy despite low mortage rates, the report said. As of May 31, total credit for the economy reached VND14.03 quadrillion ($570 billion), up 2.41% from the start of the year. Of this amount, VND1.81 quadrillion ($73.53 billion) was property consumer credit in the real estate industry, up 1.15%.

Shinhan Securities Vietnam attributed the modest growth in property consumer credit to weak demand amid economic challenges and a mismatch between supply and demand. While supply mainly consists of high- and mid-end projects, the demand is primarily for affordable housing.

The broker predicted that the real estate market could begin to rebound in H2 and throughout 2026 thanks to continued low interest rates and expectations that three new real estate-related laws that took effect in August, could resolve legal obstacles for stalled projects, thereby increasing supply.

According to a report by the Ministry of Construction, as of mid June 2023, there were 1,200 real estate projects facing obstacles, primarily legal issues. Currently, hundreds of these projects are still awaiting resolution.

As for the performance of listed property developers, their H1 earnings generally declined compared to the same period last year. Shinhan Securities Vietnam estimated a 22% drop in revenues and a 31.7% decline in net profit for the sector in H1. Excluding the impact of Vinhomes, the leading residential housing developer, revenue and profit for the sector could have risen by 5.4% and 27% during H1, respectively.

The securities firm projected a revival in earnings for listed developers in the coming quarters, buoyed by planned project handovers and business expansion. Notable companies expected to benefit include Vinhomes, Khang Dien House Trading and Investment JSC, Nam Long, and Novaland.