Week 34/2024 – Central Vietnam Real Estate News Summary

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   1. The Huge Influx Of Capital Into the Real Estate Market.

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1. The real estate market in Vietnam is currently being fueled by an abundant inflow of capital from various sources beyond just bank lending. According to a report from the Ministry of Construction, the outstanding loans for real estate business activities have surpassed the 1.2 quadrillion VND mark as of the end of May.

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   In addition to bank credit, the real estate market is also being supplemented by bond issuances. Cumulatively from the beginning of the year, enterprises have conducted 102 private bond issuances valued at 104,109 billion VND and 10 public bond offerings worth 11,378 billion VND. The real estate sector continues to maintain a dominant position in raising capital through the bond market.

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   Furthermore, the Vietnamese real estate market is also attracting foreign direct investment (FDI). Data shows that FDI into Vietnam in the first 6 months of the year reached 10.84 billion USD, up 8.2% year-on-year. This is considered a positive signal for the real estate market.

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   Overall, the injection of this diverse pool of capital is expected to help the Vietnamese real estate market rebound quickly in the coming time. Experts assess that the huge influx of capital into the real estate market is a crucial driving force to propel the development of this sector.

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   However, the increase in investment sources also poses major challenges in terms of management and risk control, especially in the context of a volatile market. Regulatory authorities will need to have appropriate policies and solutions to guide capital flows into safe and efficient areas.

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Source: cafef.vn

2. Price Of New Apartment In Da Nang Increase 20%.

In the second quarter, the primary selling price of apartments in Da Nang city surged to approximately 75-88 million VND per square meter, marking a 20% increase quarter-on-quarter, as reported by Avison Young. The price rise is attributed to the launch of high-end projects, such as a newly topped-out 34-story development in Lien Chieu district, and a luxury apartment complex on Tran Hung Dao Street. Notably, a 25-story project on Bach Dang Street now commands prices over 100 million VND per square meter, with the most expensive units costing around 15 billion VND.

Despite these price hikes, the apartment absorption rate has decreased to 35-40%, indicating lower liquidity in the market. Buyers are increasingly cautious due to the rapidly escalating prices and ongoing legal changes, which have limited the customer base, especially in the high-end segment. Additionally, real estate firm DKRA reported that nearly 60 units were sold in July, down 19% year-on-year, with an average absorption rate of 55%. This decline is linked to a 45% year-on-year decrease in available supply, as developers delay project openings to address legal issues and construction progress. The demand surge, fueled by rising tourism, has also contributed to the price increases.

Source: vnexpress.net

3. Rising Land Prices Implications For Property Owners And Future Real Estate Costs.

Võ Huỳnh Tuấn Kiệt, the Director of Residential Project Marketing at CBRE Vietnam, discussed the implications of Ho Chi Minh City’s recent draft of the new land price table.

He highlighted that the significant increase in land prices could greatly affect property owners, particularly those wishing to convert agricultural or non-agricultural land to residential use.

The new pricing structure is expected to raise conversion costs, indirectly increasing the selling price of real estate. While ongoing or approved projects might see minimal impact, new projects will face higher development costs due to increased land conversion and compensation fees.

This could drive up property prices. Additionally, other costs such as construction and financial expenses will also contribute to rising real estate prices.

Source: cafef.vn

4. A Model For Sustainable Living And Economic Growth In Vietnam’s Ecological Industrial Cities.

This model integrates industrial zones with modern urban amenities, offering residents convenient access to jobs while enjoying a high quality of life. It emphasizes sustainable development, environmental protection, and clean energy use, making it economically viable by boosting local economies and property values. The Prodezi project in Vietnam exemplifies this model, featuring both an industrial park and an ecological urban area with modern infrastructure.

Residents benefit from business opportunities, like renting out properties due to high demand from the nearby industrial zone. The project offers a green living environment with full amenities, including parks, swimming pools, shopping centers, and schools. Prodezi also boasts convenient transportation links to the city center and surrounding areas.

In summary, the article underscores the significance of the integrated ecological industrial city model, with Prodezi poised to become a successful example, enhancing residents’ quality of life and promoting sustainable development in Vietnam.

Source: baodautu.vn

5. How Will The Real Estate Market Develop From Now Until The End Of The Year?

Nguyễn Quốc Anh, Deputy General Director of Batdongsan.com.vn, emphasizes that the intrinsic value of real estate will be crucial for sustainable price growth in the upcoming market cycle. He notes that significant changes in Vietnam’s Land Law typically occur every decade, addressing lingering market issues. For instance, the 2013 Land Law alleviated oversupply from 2008-2013.

Currently, the real estate market is facing challenges, but new government policies aim to resolve these issues. Anh predicts an increase in demand for apartments between Q1 and Q3 of 2024, with more transactions expected by the year’s end for genuinely valuable properties.

By Q2 2025, the market is forecasted to recover, with growing interest in land plots and villas. Early 2026 is expected to bring market stability and a diversity of real estate products.

Presently, the demand for apartments remains strong, particularly in Hanoi and Ho Chi Minh City, with secondary homes gaining popularity, as interest in this segment rose from 33% to 44% in late 2024.

Source: cafef.vn

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