Vietnam realty market forecast to recover in 2024

Vietnam’s ailing real estate sector would only recover by next year despite government efforts to remove market woes, according to experts.

Speaking at Spring Real Estate Forum held in Hanoi on Friday, Vietnam Association of Construction Contractors chairman Nguyen Quoc Hiep, said the government’s freshly-issued Decree 08 on corporate bonds is expected to prevent the market from collapsing rather than reviving the entire corporate bond market and recovering investor confidence.

He argued that the decree does not protect bondholders in the best way in the context that large amounts of bonds will mature this year.

Another reason, according to him, is bank loans for the property sector having dropped. Property developers also hold a wait-and-see attitude toward legal issues as lawmakers amend the three laws on land, housing, and real estate trading, Hiep said.

Like Hiep, Vietnam Real Estate Association vice chairman Do Viet Chien said the realty market would continue to experience these woes because the three laws are still being amended.

"Developers should be aware that upcoming legal changes and improvements are for the long term," he noted.

Chien argued that the government’s special task force for the property market has taken many actions to help solve market difficulties but there are problems that need higher-level decisions as the working group does not have enough authority.

"Perhaps they need more authority, especially when dealing directly with developers in different regions," he added.

Nguyen Van Dinh, another vice chairman of the Vietnam Real Estate Association, said the government should quickly work out regulations to kick off the VND120 trillion ($5.07 billion) package by the State Bank of Vietnam for social housing.

In addition to social housing, he suggested the government pay attention to mid-range and high-end housing projects that near completion but construction is halted as developers have run out of money.

Dinh suggested developers restructure in line with market conditions and their resources, and improve their product portfolio to boost liquidity and cashflow.

"Social housing should be an integral part of their portfolio. This includes major companies focusing on high-end units," said Dinh.

For bond issuers, he said these developers need to complete payment deals with their debtholders in order to recover investor confidence.

Expert Dinh Trong Thinh said rebuilding investor confidence is also a way for issuers to save themselves rather than just relying on government support.

"Decree 08 allows a maximum payment extension of two years. But if bondholders trust developers, it is likely the period might be five or seven years, even 10 years. Laws do not ban this," he said.