Call for digital transformation in real estate transactions

Call for digital transformation in real estate transactions

The Ministry of Construction (MoC) is developing a pilot project to establish a State-managed Real Estate Trading Centre.

Investors study a project perspective in a real estate exchange. — Photo diendandoanhnghiep.vn

Digitising real estate transactions is essential for improving transparency and efficiency in the market, according to Deputy Minister of Construction Nguyễn Văn Sinh. 

Speaking at the 10th anniversary celebration of the Vietnam Association of Real Estate Brokers (VARS) on Wednesday, Sinh revealed that the Ministry of Construction (MoC) is developing a pilot project to establish a State-managed Real Estate Trading Centre.

The project aims to promote sustainable market growth and minimise fraud risks, with the MoC working in collaboration with the ministries of justice, finance and natural resources and environment.

Once operational, the centre will enable buyers and sellers to conduct real estate transactions online, significantly streamlining the process, Sinh said.

During the event, Sinh called on trading floors and real estate brokerage businesses to improve their professionalism and adhere to ethical standards. He stressed that meeting legal and transparency criteria is a mandatory requirement to protect the rights of both buyers and investors.

Furthermore, Sinh emphasised the need for businesses to actively adopt technology and develop online sales channels. This shift will allow customers to easily access project information, locations, planning details, sales documents and complete the entire home-buying process remotely.

However, experts warned that without stringent regulations and integrated systems, online real estate platforms could become vulnerable to price manipulation and speculative activities.

While real estate transactions can be digitised, they cannot operate under the same mechanism as stocks, said Nguyễn Quang Huy, executive director of the Faculty of Finance and Banking at the Nguyễn Trãi University. 

Real estate deals are more complex due to factors such as high transaction values, legal issues, zoning, evaluation and financial aspects, which differ significantly from stocks, Huy told vietnamnet.vn. 

He added that the low liquidity in real estate is a result of lengthy transfer procedures that involve multiple agencies.

Huy also outlined major challenges in digitising real estate transactions, including legal constraints, security risks, market manipulation, high implementation costs and property evaluation difficulties. 

According to Phạm Viết Thuận, director of the Institute for Natural Resources and Environmental Economics in HCM City, Việt Nam currently lacks necessary information infrastructure and data and security mechanisms to establish a real estate trading centre. 

He suggested launching trial programmes in Hà Nội and HCM City, given their high transaction volumes. However, Thuận emphasised that successful integration with notary offices, land registries and real estate firms is crucial to prevent issues such as price inflation and tax evasion.

Huy has called for the standardisation of nationwide land databases to ensure transparent electronic management and successfully digitise property transactions.

He said that the top priority should be the establishment of official online real estate exchanges, which should be linked to notary offices, tax authorities and banks. He also highlighted the need to strengthen legal frameworks to recognise electronic contracts and digital signatures.

Blockchain technology should also be implemented to prevent fraud and tampering, as well as the development of secure online payment and mortgage processing systems integrated with banks, Huy said.

While digital real estate transactions are an inevitable trend, Việt Nam must adopt a phased approach to ensure technological, legal and financial readiness.

He pointed out the importance of learning from successful models like Estonia and Dubai, while also being cautious of pitfalls experienced in other markets.

If executed effectively, an online real estate marketplace has the potential to enhance transparency, reduce risks and increase liquidity within Việt Nam's property sector, Huy added. 

Bizhub