VIETNAM’S MINISTRY OF CONSTRUCTION: DEMAND FOR PRIVATE HOUSES AND LAND INCREASED SHARPLY
The latest Q1/2024 report from the Ministry of Construction offers a thorough analysis of the Vietnam real estate industry, showcasing the diverse range of activities observed in different housing segments and regions. The data indicates ongoing development efforts, although there are notable differences between regions.
Commercial Housing Developments:
During the first quarter, the market witnessed the successful completion of 10 commercial housing projects, resulting in a total of 4,706 units. This indicates a decrease to 34.48% from Q4/2023 and a completion rate of 71.43% compared to the same quarter last year. The projects were spread across three regions: North, Central, and South, with three projects in each region.
Licensing and Future Endeavors:
During this time, 19 new projects were licensed, totaling 9,774 units. These figures indicate a nearly consistent licensing pace, with 95% of the previous quarter’s rate. Additionally, there has been a notable increase of 111.76% compared to the same period in 2023. Most of these projects were located in the North (12 projects) and the Central region (7 projects).
Future Sales Eligibility:
There were 38 projects that received approval for future sales, which included a total of 5,527 units. This represents a decrease of 80.85% compared to the previous quarter and 73.08% compared to Q1/2023.
Construction in Progress:
Construction on 984 projects is progressing, with approximately 421,353 units being built. This represents a substantial increase of 115.22% from the previous quarter and 140.97% from the same period last year. The North Vietnam took the lead with an impressive 406 projects and a whopping 236,873 units. Following closely behind is the Central region with 360 projects, totaling 91,022 units. The South Vietnam also made a significant contribution with 218 projects, amounting to 93,458 units.
Social Housing:
In Q1/2024, a remarkable 13 social housing projects were reported in 42 different localities, resulting in an impressive total of 16,008 units. Vietnam has successfully completed five projects, totaling 2,016 units. Additionally, four projects are currently under construction, which will add a total of 8,073 units to the market. Four other projects have been approved in terms of investment policies, which will contribute an additional 5,919 units.
Real Estate Inventory:
In Q1/2024, there were a total of 23,029 units in inventory, consisting mainly of individual residential real estate and land plots. Among those, there are 3,706 residential units, 8,468 individual housing units, and 10,855 land plots.
Transactions:
The market recorded 35,853 purchases in apartments and single-family homes, representing a remarkable 29.95% rise from Q4/2023. Land transactions increased even more dramatically, totaling 97,659, or a 19.86% increase over the previous quarter. Year-over-year comparisons show a mixed picture, with apartment and home transactions down 18.49% but land sales up an astonishing 45.18%.
Policy Initiatives:
In order to promote a stable, healthy, and sustainable real estate market, the Government and relevant authorities are focused on developing and issuing guidelines for the implementation of important laws such as the Land Law, the Law on Credit Institutions, the Law on Real Estate Business, and the Law on Housing. These initiatives are designed to ensure smooth implementation by July 2024. In addition, local authorities are swiftly revising their regulatory documents to comply with the new Land Law. The Ministry of Justice and other relevant agencies have been assigned the responsibility of addressing any shortcomings in existing policies and laws.
A Significant Surge in Foreign Direct Investment into Vietnam Real Estate Market:
According to the most recent data from the General Statistics Office, Vietnam has experienced a 4.5% rise in total foreign direct investment (FDI) compared to the corresponding period in 2023, reaching around $9.27 billion. This amount includes newly registered capital, changes to existing registrations, and capital contributions made through share purchases.
The investment landscape is experiencing a robust expansion, characterized by a notable rise in the number of projects and a remarkable increase in value. 966 projects have successfully raised $7.11 billion in cash, showcasing a significant increase of almost 29% in project numbers and an impressive 83% surge in value. The investment influx was primarily directed towards the processing and manufacturing industries, amounting to approximately $5 billion in capital and making up 70.2% of the total investment.
The real estate sector has experienced a substantial increase in investment, with $1.6 billion in FDI and securing the second position in terms of investment receipts. This shows a significant increase of four times compared to the same period last year, despite the ongoing challenges in the local real estate market.
Over the past 35 years, Vietnam’s real estate market has managed to attract an impressive $66.4 billion in foreign capital for around 1,100 projects. These investments have come from 48 different nations and territories, highlighting the widespread international interest in Vietnam’s real estate sector. Singapore is leading the pack as the largest investor, with South Korea, the British Virgin Islands, and Japan not far behind. This highlights the international trust in Vietnam’s real estate potential, despite the challenges it may pose.
