Week 41/2023 – Central Vietnam Real Estate News Summary

In this weekly or sometimes bi-weekly news flash – CVR: Central Vietnam Realty will provide a choice of articles from mainly Vietnamese media sources related to the real estate market in Vietnam.
We will be focusing on issues related to Da Nang and Hoi An, while also looking at national news and their possible impact on Central Vietnam’s property market.
You will find a summary, a link to the source as well as CVR’s take on the article.

We believe that local knowledge is the key to making the best possible decision and that’s what we offer to all our clients.

“CVR: Western Management – Local Knowledge”

• 1. Investors Show Renewed Interest in Land Market as Fears Subside

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The land market in some areas is showing signs of warming again when people with real housing needs and a part of investors have decided to put down money after the exploration period.

Just a few days after posting the sale ad, Ms. Huyen (Ha Dong – Hanoi) said she had successfully closed a plot of land located on the corner of two roads at a price of nearly 2 billion VND. Similarly, Ms. Lien, another landowner, also successfully closed a deposit with a buyer of her plot of land for sale nearby.

Although the number of transactions is still low compared to when the market was vibrant, in general, liquidity and investor interest have increased more than before. This shows that the psychology of people who want to buy real estate to live and invest has been relieved and less hesitant than before.

It can be seen that after a period of time the real estate market has had many fluctuations, especially the selling price and liquidity of the land segment continuously decreased. To date, this segment has regained the attention of many investors. However, it still takes more time for buyers to completely remove their fears.

Source:24h.com.vn

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3. 2. Challenges ahead for the real estate market in the near future

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The article discusses the challenges facing the real estate market in the near future. Despite the government’s proactive efforts to address these challenges, the market still encounters difficulties that require time to overcome.

The main issues highlighted in the real estate market include:

1. Lack of legal synchronization: Laws related to real estate investment, business, housing, land, and other relevant laws are not yet synchronized and fail to keep up with the market’s development. 
2. Project implementation hurdles: Many real estate projects face obstacles in their execution, with approximately 70-80% of projects temporarily suspended. 
3. Inadequate product supply: While the supply decreases, the product structure remains inadequate, lacking affordable housing options for low-income urban residents, particularly for workers and social housing.
4. Weakened purchasing power and decreased market liquidity: Weak purchasing power leads to a decline in market liquidity.
5. Difficulties in accessing capital: Businesses face challenges in accessing capital for their real estate projects.

Furthermore, the article mentions six key risks and challenges the real estate market will face during the 2023-2024 period, including weak demand, inflation, financial risks, slow credit growth, difficulties in corporate restructuring, and the recovery time for bonds and real estate.

Source:cafef.vn

3. Rising Demand for Logistics Real Estate in Vietnam Fueled by E-commerce Growth

The high demand for logistics real estate in Vietnam is being driven by various factors, including the limited supply of warehouse space in the northern region, creating opportunities for investors to develop high-rise warehouses and smart logistics hubs. Despite a global trend of decreasing demand for logistics space, new logistics supply in many markets, such as the United States and Spain, has been observed. 

Investors are particularly interested in the Asia-Pacific region due to strong market fundamentals and growing demand for logistics properties. Vietnam’s booming e-commerce sector and sustainability considerations in negotiations between landlords and tenants are contributing to the promising outlook for the logistics industry in the region.

Source:reatimes.vn

4. What scenario will the real estate market develop in the last quarter of the year?

The Q3 and 9-month market research report on the residential real estate market in Vietnam for 2023 by DatXanh Services reveals several key findings. In comparison to the same period last year, the market continues to face a shortage of new supply, with absorption rates dropping significantly, averaging below 20%. Government policies aimed at alleviating market challenges have yet to show significant effectiveness in driving recovery. 

Economic conditions, both domestically and globally, have had an unfavorable impact on the real estate market, with market confidence not fully restored. However, there are some positive aspects, such as the decrease in deposit interest rates to their lowest since 2020. This has resulted in a reduction in mortgage interest rates, comparable to early 2022. While overall absorption rates remain low compared to pre-crisis levels, Q3 of 2023 saw a gradual increase over the previous quarters. 

Regarding the residential real estate segment, around 90% of the primary supply in Q3/2023 came from existing projects. The total primary supply, including existing and new, was approximately 38,000 units, with the North having around 14,000 units, the Central region with about 3,300 units, the South with around 17,500 units, and the West with approximately 2,600 units supplied to the market.

Source:cafef.vn

5. Real Estate Market Shows Signs of Revival Amid Optimism

Many real estate agents and experts are optimistic about the real estate market’s resurgence from now until the end of 2024.

Real Estate Transactions Are Picking Up

Mr. Hoang Ngoc Nhat, a real estate broker and investor in Hanoi, faced a challenging year investing hundreds of millions of Vietnamese dong in advertising and customer care without much success. However, recent times have seen a gradual resurgence in real estate transactions, driven by government policies that have eased legal and credit obstacles, improving investor sentiment.

Thanks to these developments, Mr. Nhat managed to close deals on two plots of land in Thach That and sell three plots in Chuong My, despite a nearly 30% price reduction compared to the peak period. The land’s accessibility and investor appeal led to quick sales.

Recovery in Suburban Land Sales

While the market is improving, it remains cautious. Real estate agents’ claims of multiple monthly transactions are often exaggerated, and a single transaction per month is considered good in the current market.

Experts Weigh In

Economic expert Le Dang Doanh noted that declining interest rates have boosted investor confidence and led to a resurgence in real estate investment. Dr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, highlighted government policies and lowered interest rates as key factors in the market’s recovery, anticipating a revived real estate trading market, although not to its pre-2020 boom levels.

Source:cafebiz.vn

6. Government to cut land use fees by 30%

The government has decided to reduce land use fees by 30 percent from November 20 for the remainder of 2023. 

A decision to this effect has been signed by Deputy Prime Minister Le Minh Khai. 

The lower fees will benefit organizations, units, enterprises, households, and individuals who directly lease land from the State under State agency decisions or contracts and make rent payments annually. 

Earlier this year, the Ministry of Finance (MoF) submitted a proposal on the reduction to the Prime Minister for approval, as part of measures to help businesses and individuals overcome the ongoing difficulties and challenges. 

In 2020 and 2021, the MoF submitted to the government for issuance a number of decisions on reducing land use fees for those who leased land from the State and were affected by the Covid-19 pandemic. 

In 2022, the ministry again submitted to the Prime Minister for issuance a decision to reduce land and water surface use fees for those affected by the pandemic. Total land and water surface rent reductions in 2020-2023 are estimated at over VND8 trillion ($335 million).

Source:vneconomy.vn

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