Foundations being laid for 2024 real estate rejuvenation
Foundations being laid for 2024 real estate rejuvenation
Although the real estate market has not yet overcome the current downturn, it is hoped recent government policies are gradually removing difficulties to open up more opportunities for developers, investors, and home buyers over the next few years.
At a government press conference on July 4, Deputy Minister of Construction Nguyen Tuong Van said based on recent reports sent by the local authorities of Ho Chi Minh City, Hanoi, Danang, Haiphong, Can Tho and Dong Nai to the government’s working group on boosting real estate, three key problems in the sector continue to be institutional implementation, bonds, and capital management.
The working group also made many recommendations to the prime minister, who has issued documents over the past few months on urgently dealing with issues in the sector.
Alongside that, the Ministry of Construction and the Ministry of Natural Resources and Environment have submitted to the National Assembly a series of new regulations related to real estate to help iron out issues.
As of June, out of over 100 projects in line for legal review, 16 projects in Ho Chi Minh City have been resolved. For the remaining projects on the waiting list, the city’s People’s Committee wants 50 more projects to resolved by the end of 2023.
The State Bank of Vietnam (SBV) has also issued a series of circulars on restructuring repayment terms and keeping the debt group of some enterprises unchanged, as well as on credit support and foreign banks buying and selling bonds.
There has been the approval of a credit package of $5.1 billion for the development of social housing, which is expected to be a driving force to boost the supply of social housing and worker housing projects in Ho Chi Minh City to address the supply-demand imbalance that has existed in the market for many years.
However, it may take some time to fully take advantage of this support package, as only six eligible projects in Ho Chi Minh City have been approved to receive a disbursement plan thus far.
In May, the government also issued a decree on the implementation of the Law on Land, which permits the issuance of certificates for certain types of tourist apartments, accommodation offices, tourist villas, and resorts.
The SBV has also lowered the operating interest rate three times consecutively since the beginning of the year. The average new deposit interest rate of banks is currently at about 6.1 per cent a year, down 0.37 per cent; the average new lending interest rate is about 9.07 per cent a year, down 0.9 per cent compared to the end of 2022.
According to experts, lower deposit interest rates can make investors move to new funding options instead of saving.
“The gradually cooled lending rate is expected to become a lever for businesses and investors, helping to increase liquidity and create impetus for real estate to recover,” said Dinh Quang Hinh, head of the Macroeconomics and Market Strategy Department of VNDirect Securities.
Another critical factor is a range of public infrastructure projects being kickstarted up and down the country. According to the Ministry of Transport, the road network planning for 2030 will prioritise the inclusion of high-speed highways in the investment portfolio, to eventually form a network of 5,000km.
Other positive signals include the inauguration ceremony of Dau Giay-Phan Thiet Expressway, Ring Road No.3, and the restarting of expressway construction at Ben Luc-Long Thanh after a four-year delay.
The Long Thanh International Airport project is expected to serve 100 million passengers a year and transport five million tonnes of cargo a year. Airports Corporation of Vietnam, after completing the selection of contractors, hopes to start construction of its airport terminal in August, at a cost of $1.45 billion.
Meanwhile, Duong Thuy Dung, executive director of CBRE Vietnam, commented that the liquidity of Ho Chi Minh City’s condominium market will be more dynamic in the latter half of 2023.
“Banks will lower home loan interest rates when pressure on the cost of capital has cooled down. Infrastructures projects such as metro lines and ring roads, as well as the authority’s efforts to review the legality of pending projects, are motivations for the market. The last six months of 2023 will be preparation time for the recovery of the Ho Chi Minh City real estate market,” Dung said
Bui Trang, country head of Cushman & Wakefield Vietnam, said that the real estate always went through four stages before forming a new cycle: recovery, growth, fever, and recession. In the past few months, Vietnam seems to be going through a quiet period.
“This status, however, can also be viewed optimistically, as the market is going through a detox period to become more sustainable and healthier,” Trang said.
