VIETNAM REAL ESTATE: LEGAL REFORMS AND RENEWED GROWTH IN 2024
The real estate market in Vietnam for 2024 is experiencing significant shifts, propelled by the establishment of clearer and more transparent legal frameworks. The implementation of these reforms, backed by synchronized policies from both central and local governments, is creating a revitalized momentum throughout the sector. The resolution of significant project bottlenecks has rejuvenated market activity, providing some relief to ongoing supply shortages.
Meanwhile, initiatives to expedite affordable and social housing projects are advancing, demonstrating a strategic commitment to meet the nation’s pressing housing needs. For further updates and professional insights on the investment potential of Vietnam real estate market, residential leasing and asset management services by Arcadia Consulting Vietnam, reach us at [email protected]
Legal Reforms to Transform Vietnam’s Real Estate Market
On August 01, 2024, Vietnam implemented three significant laws—the revised Land Law, Housing Law, and Real Estate Business Law. Their objective is to redefine the parameters of the real estate market by implementing a more transparent and structured legal framework that has been a longstanding request from investors and developers. The reforms prominently feature the alignment of regulations among the three laws, aiming to resolve the inconsistencies that have long affected Vietnam’s real estate sector. The government has committed to prompt follow-up measures, with decrees and circulars scheduled for immediate issuance, guaranteeing the timely implementation of the laws.
The National Assembly has enacted essential resolutions to tackle the challenges facing Vietnam’s real estate sector, coinciding with the implementation of new legal reforms. Resolution 161/2024/QH15 highlights the importance of enhancing the effectiveness and efficiency of policies and laws related to real estate market management and the development of social housing. Resolution 171/2024/QH15 establishes a pilot mechanism for the execution of commercial housing projects via agreements concerning land-use rights or current land rights. The proposed resolutions are designed to eliminate legal obstacles, thereby facilitating a greater supply in the property market.
Vietnam’s Real Estate Market Indicates Positive Trends
Through the alignment of essential regulations, a set of strategic initiatives has been put in place to tackle the issues facing Vietnam’s real estate sector. These initiatives have resulted in favorable changes, enabling the sector to overcome its most challenging phase and generate momentum for recovery and expansion. In 2024, the market achieved over 47,000 successful transactions, resulting in an absorption rate of 72%, which is nearly three times the rate observed in 2023. In the fourth quarter, we observed over 20,000 transactions, which represents an increase of nearly fourfold compared to the same period last year.
The apartment segment significantly dominated Vietnam’s real estate market in 2024, representing 75% of total transactions. New projects demonstrated robust absorption rates, averaging over 70%. Several developments reached over 90% absorption right at the official launch, underscoring strong buyer interest. The low-rise housing segment experienced enhancements as the market recovered. Recently initiated low-rise developments achieved an absorption rate of approximately 65%, translating to nearly 9,000 transactions. It is important to highlight that over 60% of these transactions originated from only two major urban projects initiated by Vinhomes.
Localities Focus On Social Housing As New Housing Law Is Implemented
The 2023 Housing Law, which took effect on August 01, 2024, brings forth substantial changes that serve the interests of both residents and real estate developers, especially in the area of social housing development to optimize the equilibrium between supply and demand within the social housing sector.
A significant aspect of the new legislation removes the processes for establishing land prices, land use fees, and rental payments at the beginning of projects. This represents a significant advancement, facilitating the removal of barriers for developers and expediting the execution of social housing initiatives. The legislation not only tackles the obstacles encountered by enterprises but also simplifies the terms for purchasers. The income eligibility threshold for social housing applicants has been increased from 11 million VND to 15 million VND per month. Additionally, applicants must not own property in the province or city where the project is situated.
The 2023 Housing Law has implemented new measures aimed at enhancing social housing support, notably through Article 77, Clause 5. This provision enables state-designated credit institutions to extend preferential loan options to qualified buyers and tenants of social housing. The legislation eliminates residency requirements for social housing benefits, assigning the responsibility of income criteria assessment to the government. Individuals residing in social housing are no longer obligated to fulfill criteria concerning homeownership or income thresholds.
The recent regulatory advancements have reinstated trust among developers. Following a phase of stagnation, the competition to develop social housing projects has intensified since the beginning of 2024. By year-end, multiple significant social housing projects commenced in Hanoi and Ho Chi Minh City.
Significant Real Estate Initiatives Have Been Greenlit Following Government Interventions
In response to General Secretary To Lam’s directive aimed at addressing corruption, waste, and inefficiency, local governments have initiated task forces to tackle longstanding challenges in real estate projects.
In Hanoi, following two high-level meetings, the Hanoi People’s Committee has successfully unblocked nearly 10 stalled projects. Notable initiatives encompass the Cao Xa La development in Thanh Xuan District, the 148 Giang Vo project, the 46 Lo Duc project, and SHB’s headquarters located on Ly Thuong Kiet Street. Ho Chi Minh City has prioritized the removal of obstacles for key initiatives, including the Smart Complex in Functional Area 2a of Thu Thiem New Urban Area, the 14.8-hectare site in An Phu Ward, Thu Duc City, the High-Rise Housing Project in Phu My Ward, District 7, and the I-Home Commercial and Apartment Complex located on Pham Van Chieu Street in Go Vap District.
These accomplishments reflect significant initiatives by government entities to eliminate obstacles, particularly for projects that have extensive implications for the real estate sector, indicating a constructive move toward resolving enduring issues.
Hanoi’s Condominium Prices Are Experiencing A Significant Increase Due To Supply Shortages
Following a three-year period of constrained new supply, the condominium market in Hanoi has witnessed a significant increase in prices, escalating by 40-50% within a single year. Apartments in the price range of 45-55 million VND/m2 have virtually vanished from the market. Currently, new projects are being initiated at a price range of 75-120 million VND/m2, while centrally located developments in Ba Dinh, Dong Da, and Tay Ho districts are achieving prices between 150-200 million VND/m2.
Previously viewed as depreciating assets, condominiums have emerged as a lucrative investment opportunity in 2024, drawing a significant influx of buyers to this market segment. This resurgence of interest has sparked a significant “price frenzy” in the apartment market, propelling the segment into an intense demand cycle. The ongoing increase in condominium prices is creating considerable volatility in the market. The business community has formally submitted several petitions to regulatory authorities, advocating for the prompt implementation of measures to enhance market supply.
Auction of Land in Hanoi Achieves Record-Breaking Results in 2024
In conjunction with the increasing demand for condominiums and land plots, the auction land segment in Hanoi has consistently set new records throughout 2024. In various auctions, the winning bids significantly exceeded the starting prices, fueled by a substantial influx of participating investors. Several auctions extended over multiple rounds before a winning bidder was determined, indicating significant competition in this area.
In an auction held in October in Ha Dong District, 27 plots were successfully sold following 14 rounds of bidding. The top bid for a plot in Dong Danh – Dong Coc (Phu Luong Ward) surpassed 262 million VND/m2, which is about 8.2 times the initial price. In Thanh Oai District, an early August auction of 68 plots attracted nearly 7,000 applications and 2,000 participants, marking it as the largest auction ever recorded in the district. The successful bids varied between 63 and 80 million VND/m2, with the top plot achieving a remarkable 100 million VND/m2—representing a 5 to 6-fold increase from the initial price.
In light of the intricate dynamics surrounding these auctions, the government has mandated the establishment of inspection teams tasked with evaluating auction protocols, scrutinizing starting price assessments, and pinpointing any legal vulnerabilities.
