Legal obstacles affect balance of realty market
Legal obstacles affect balance of realty market
Regulatory barriers must be removed to allow the local real estate sector to maintain balance and stimulate growth, experts stated at a conference in HCMC on Thursday.
Held by Forbes Vietnam, the Real Estate Conference 2019, under the theme “In Quest of Market Equilibrium,” was aimed at empowering developers to map out business strategies and help investors decide on the best time to access the market.
Neil Macgregor, managing director of real estate consulting firm Savills Vietnam, noted that local realty firms have been facing high demand over the past two years. However, the main obstacles lie in taking out loans, securing land and launching projects.
He pointed out that the greatest challenge is to obtain licenses for new projects.
Despite the robust demand, the current hindrances have resulted in significantly declining property supplies in HCMC, according to Nguyen Thai Phien, senior director of corporate finance at HCMC-based Novaland Group.
These hindrances have put property developers under mounting pressure to seek land while ensuring their products are offered for sale at competitive prices, Phien remarked, adding that Novaland has changed its strategy targeting urban areas in neighboring provinces.
Securing land and getting their projects licensed are also major hurdles for foreign investors, said Ivor Cosimo Jencks, general director and head of business development commercial property, South Asia, at Hong Kong Land.
However, according to Jencks, international real estate developers are still optimistic about the development of the segment though they are well aware of regulatory changes that could delay the approval of their projects.
Will Hoc Nhan, deputy chief commercial officer of Alpha King, explained that the solution is to take a proactive approach with new plots of land in both urban and suburban areas of HCMC.
Nhan noted that available plots of land covering more than one hectare in the downtown area are extremely rare and valuable, and site clearance is hard work. Therefore, property developers are expected to face fierce competition in the foreseeable future.
Despite these barriers, experts believed that there will be more positive changes from the market and policymakers. They expected the issues surrounding project licensing to be resolved soon, given the increasing coordination between domestic real estate developers and local and central governments.
Having witnessed the success of real estate developers on the local stock market, as well as supporting factors for the real estate ecosystem, Macgregor pointed out that his consulting firm does not worry much about the overall market performance.
In the first half of this year, Vietnam’s economy grew by 6.78%, the highest in Southeast Asia. Macroeconomic indicators, such as interest rates, exchange rates and inflation, have provided vital support for the real estate market.
However, the market has seen supply and transactions drop sharply between January and September this year. In addition, in the industrial real estate sector, which has been active and has increased in quantity and price, transactions and capital flows in real estate have not been positive.
