Each week we post a news flash with notable articles related to the real estate market in Vietnam. We asked our team to pick the top stories from the past month and we’ve tallied the results. Check out the headlines that made big news in our office below. Have any of the articles we’ve shared impacted you? Is there any important news we’ve missed? We’d love to hear from you!
Our CVR team is here to answer your questions at any time. Whether buying, selling, renting, or opening a business, contact us to talk about your real estate needs today.
Your Friends at Central Vietnam Realty.
AUGUST 2023 CENTRAL VIETNAM REAL ESTATE NEWS SUMMARY
1. Proposal to Eliminate Apartment Ownership Duration in Draft Law
The Ministry of Construction on behalf of the Government submitted to the National Assembly for consideration and comments for the first time on the draft Housing Law (amended), in which the draft Law does not stipulate the duration of apartment ownership as desired. proposed by voters.
On that basis, voters proposed to recognize the ownership of an indefinite apartment building associated with a stable and long-term land use right, or recognize the ownership of an apartment building with a term attached to the right to use the land.
Regarding this content, according to the Ministry of Construction, for apartment ownership with a definite term, in the Notice of Conclusion No. 2101/TB-TTKQH, the National Assembly Standing Committee also had an opinion that, this is a highly sensitive issue with great impact on society and there are still disagreements.
Therefore, the Ministry of Construction has requested the Government to receive the opinion of the National Assembly Standing Committee that there is no regulation on ownership of condominiums with a definite term in the draft Law on Housing (amended) to submit to the National Assembly opinion assembly.
On April 14, 2023, the Ministry of Construction on behalf of the Government signed Report No. 119/TTr-CP to the National Assembly for consideration and comments for the first time on the draft Housing Law (amended), in which: The draft Law does not stipulate the duration of apartment ownership as suggested by voters.
Experts say that the term of apartment ownership should not be regulated, because it interferes with ownership, greatly affecting the interests of people and businesses, and the real estate market.
2. Insights into the Escalation of the Real Estate Market
Despite a relatively lackluster performance during the first seven months of 2023, the Vietnamese real estate market has shown signs of growth. A surge in demand for property purchase across various types of properties, particularly apartments, villas, and land plots, has fueled this positive trajectory. Major cities like Hanoi and Ho Chi Minh City have experienced substantial increases in interest, signaling a broader recovery trend. Experts predict that factors like increased liquidity, favorable legal changes, and infrastructure investments will contribute to further market expansion, attracting global investment in the coming years.
Additional regulations on payment terms of 5% of the contract value.
Regarding payment in the purchase, sale and lease-purchase of houses and construction works to be formed in the future (Article 26), the Ministry of Construction said that it has suggested that the time limit for payment of 5% of the value of the house be supplemented the remaining contracts of the purchaser, the lessee to the seller, or the lessor to purchase when the competent state agency has granted the certificate of land use rights and ownership of houses and other land-attached assets. (also known as pink book or red book) is complete and valid.
3. Industrial Real Estate’s Emergence and Economic Dependency
Demand for real estate is on the rise
Data from a market research unit indicates that, overall, during the first 7 months of 2023, despite the real estate market indices not showing significant improvement, the level of interest has still decreased by 33%, and the number of property listings has dropped by 48% compared to the same period in 2022. However, the real estate market in July 2023 has begun to show signs of growth compared to the previous month.
In July, the demand for property purchases nationwide increased by 6%, and the number of property listings increased by 4% compared to June 2023. This upward trend is observed in all types of properties for sale. Among them, apartments and villas experienced the strongest recovery in interest, increasing by 7% compared to the preceding month; followed by land plots with a 6% increase, private houses and project land with a 3% increase.
The real estate market in most provinces and cities has experienced a warmer July with a slight increase in interest. Notably, Hanoi and Ho Chi Minh City saw increases of 9% and 8% respectively compared to the previous month. The list of localities with significantly increased interest in real estate in July also includes Quang Ninh (up 18%), Hai Phong (up 9%), and Da Nang (up 8%).
When will the real estate market pick up?
Ms. Trang Bui – General Director of Cushman & Wakefield Vietnam – believes that when liquidity starts to rise, it signals the turning point for real estate indices to start an upward trend. As of the second quarter, market liquidity remains subdued, and new developments in the second half of 2023 need to be observed.
According to Ms. Trang, the Government has issued and updated positive legal changes to remove obstacles and boost the real estate market. The Ministry of Construction and the working group of the Prime Minister have resolved 71 difficult and problematic documents related to 121 projects nationwide. Additionally, strong investments in infrastructure have provided a boost.
On the business side, property investors are diversifying their investment portfolios. Interest rates have been partially controlled. Cushman & Wakefield’s CEO predicts that banks will continue to tighten credit control. However, a more stringent and cautious lending environment will create a safe and long-term investment atmosphere, supporting macroeconomic stability.
Ms. Trang believes that these factors will gradually impact the market, helping it overcome the subdued season and recover. Thanks to these factors, many global major investment organizations will participate in Vietnam’s real estate market in the 2024 – 2026 period. This is also the anticipated time for market growth, entering a new price growth cycle.
Which real estate segments are attracting investment?
Starting from July 2023, the industrial real estate market began to show positive signs due to the growth of FDI inflow. However, the market’s recovery still largely depends on the overall economic recovery. As the economy grows, businesses will expand production and logistic activities.
This creates a growing demand for production spaces and warehouses. Moreover, the ready-to-transfer industrial land fund is limited, while the demand remains high, potentially maintaining a high growth rate in land rental prices in the late part of the year. Investors and lessees tend to wait and monitor the market trends, while also becoming more cautious in expanding their business scale and launching new projects.
4. Apartment Segment Shows Strongest Growth in Real Estate Market
In the first half of the year, the real estate market experienced limited transactions and supply. However, the apartment segment has displayed remarkable growth and garnered substantial attention.
Savills’ report on Hanoi’s market reveals that newly launched apartment projects have an average absorption rate of 28%, with the average primary selling price increasing by 1% quarter-on-quarter to 53 million VND/m2.
Hanoi saw a 76% quarter-on-quarter and 125% year-on-year increase in new supply during the second quarter, primarily in the 2 – 4 billion VND per unit price range, capturing a 91% share.
Despite a general decline in real estate interest and postings, July witnessed a 6% surge in demand and a 4% increase in listings compared to the previous month. Apartments saw the strongest recovery, with a 7% increase in interest from June.
Experts believe that apartments are likely to remain a focal point for investors, offering both residence and rental opportunities, ensuring a stable cash flow. As the market recovers, the apartment segment is predicted to lead the way.
5. Vietnam’s Proposed Housing Law Amendment for Foreigners
The Vietnamese Ministry of Construction has proposed an amendment to the Housing Law, seeking to allow foreign individuals to own residential properties without being tied to land use rights. The proposal also suggests extending the ownership period to one time for foreign individuals’ residences in Vietnam. The aim is to ensure equal rights and obligations for foreigners selling houses to Vietnamese citizens or overseas Vietnamese.
This proposal comes in response to a significant increase in the number of foreign individuals and organizations owning property in Vietnam since the enactment of the 2014 Housing Law.
If implemented, these changes could have a profound impact on investment opportunities and property market dynamics in Vietnam’s real estate sector.
6. How many houses have foreigners bought in Vietnam in the past 10 years?
Since the enactment of the 2014 Housing Law, Vietnam has seen about 3,035 houses purchased by foreigners, primarily apartments in various projects. Under this law, foreigners can possess commercial houses for 50 years, inherit and gift them, but ownership is capped at 30% within an apartment building or 250 units in separate residential houses.
Foreigners, predominantly from countries like Korea, China, Singapore, USA, Australia, Japan, and Malaysia, have concentrated their investments in major cities and provinces, including Hanoi, Ho Chi Minh City, Bac Ninh, Binh Duong, and Ba Ria – Vung Tau. The demand for housing among foreigners living and working in Vietnam is robust, aligning with the aspirations of around 4 million individuals looking to buy properties in the country.
7. Da Nang aims to be the leading tourism urban model in Asia
The vibrant city of Đà Nẵng aspires to ascend the ranks of prominent tourist destinations in Asia, showcasing a remarkable blend of nature, culture, and modern infrastructure. The city’s strategic investments in tourism infrastructure, coupled with innovative attractions like the Golden Bridge and Bà Nà Hills, have propelled it to a prime position on Vietnam’s tourism map.
Experts commend Đà Nẵng for its rapid urban development and commitment to creating exceptional tourist experiences. As the city eyes a future as a premier regional beach tourism hub, its focus on integrated tourism, resort real estate, and cultural offerings promises a bright path forward. Đà Nẵng’s success story underscores the significant role of tourism in local economies.
As always, CVR is at your service and happy to provide help anyways we can!
Contact Us today to find the real estate investment in Da Nang which is right for You