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Posted by Quyen Bui on December 7, 2023

Week 49/2023 – Central Vietnam Real Estate News Summary

  1. Week 49/2023 – 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”

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    1. 1. When finalizing the plan, the investor can only collect a deposit of no more than 5% of the selling price

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  3. According to the latest report, the National Assembly has approved an amendment to the Real Estate Business Law. The amendment specifies that project developers are only allowed to collect deposits from customers up to a maximum of 5% of the selling price for residential properties, construction projects, and the floor area of the building.

    The amendment prohibits sellers or lessors from collecting over 95% of the contract value if the buyer or lessee hasn’t received the necessary land use or ownership certificates. The remaining amount will be paid once the competent state authority issues the certificates, ensuring policy stability and allowing customers to retain a portion of the contract value while awaiting certification.

    Regarding transfer conditions, the amendment clarifies that it is not necessary for the transferor to fulfill the financial obligations related to the land before transferring the real estate project. However, it also does not restrict the rights of the parties in civil relationships if there is a genuine need for transfer, particularly in terms of financial resources to fulfill the land-related obligations before transferring the project.

    The amended Real Estate Business Law will come into effect on January 1, 2025, ensuring policy consistency with the proposed Housing Law. It is worth noting that the total cash reserves of 30 real estate companies have reached the lowest level in the past 5 years.

     

    The purpose of this amendment is to ensure the true nature of the deposit and minimize risks for buyers or lessees, who are often in a weaker position. The agreement for the deposit must clearly state the selling price, lease terms, and the floor area of the building. The lawmakers have voted in favor of this proposal, aiming to regulate the real estate market more effectively.

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  5. Source: Cafef.vn
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  1. 2. Passive cash flow in the real estate market

 

The Vietnamese real estate market faces passive cash flow despite reduced interest rates. Despite interest rate cuts, the economy, including the real estate market, struggles to absorb capital. Many businesses, apart from those ineligibles for loans, lack the need for borrowing due to limited business opportunities, making loan repayment difficult. This results in financial institutions having capital but being unable to lend, causing stagnant cash flow and slowing credit growth. The real estate sector, prioritized in credit allocation, grapples with reduced liquidity and market confidence, impacting GDP growth directly. Businesses are advised to proactively cut costs amid financial challenges.

 

Source: vietstock.vn

 

  1. 3. Vietnam’s national assembly officially passes amended real estate business

 

The Vietnamese National Assembly has overwhelmingly passed amendments to the Real Estate Business Law, with 94.13% support from delegates. The key objectives of these amendments are to combat “ghost projects,” fraudulent practices, and market disruptions. Stricter regulations on deposits, limiting them to 5% of property prices, aim to enhance transparency and protect buyers and tenants. Payment terms have also been adjusted, allowing buyers to retain 5% until obtaining necessary certifications. The amendments address the establishment of real estate businesses, specifying that individuals in small-scale activities must declare and pay taxes. These changes demonstrate the government’s commitment to market transparency, consumer protection, and a sustainable real estate sector, fostering stability and growth in Vietnam’s real estate market.

 

Source: vov2.vov.vn

 

  1. 4. In the hands of the Hong Kong family, Vietnam’s largest casino resort has a new move

 

The developer of the Hoiana Resort & Golf Casino project in Vietnam, has proposed the construction of an outlet center and duty-free area in the project’s second phase. 

 

The company, in a letter to the Quang Nam Provincial People’s Committee on November 17, sought guidance on procedures and policies for investing in the Outlet Mall and Duty-free Centre within the resort. The proposed outlet center and duty-free area cover 3.89 hectares, accompanied by a resort apartment building spanning 0.22 hectares. The lack of specific regulations for such developments in Vietnam prompts the company to seek guidance from authorities. 

The Hoiana Resort, initially invested in 2010, features a completed phase one with commercial and residential structures, a casino, and an operational 18-hole golf course. In the second phase, the developer plans low-rise seaside villas, golf course-facing villas, a gateway commercial and service area, and the proposed outlet center and duty-free facility, subject to regulatory clarifications. 

 

The Quang Nam Provincial People’s Committee delegates the Department of Planning and Investment to lead efforts in collaboration with relevant departments to study existing legal provisions for guiding the company in submitting appropriate documentation. The Hoiana Resort is a joint venture between VinaCapital and Malaysia’s Genting Group, with Suncity Group later taking over Genting’s position. The resort, under the control of Hong Kong billionaire Cheng’s family, comprises a casino, golf course, and luxury hotels with ongoing infrastructure development, targeting an estimated total investment of around USD 4 billion.

 

Source: dantri.com.vn

 

  1. 5. Investor eagerly hunt land plot at the end of year

     

In the context that the real estate market has shown certain signs of improvement, many consultants are taking advantage of “hunting” for land to get ready for the new cycle.

 

During a year when the real estate market was quiet, the Government, ministries and localities took many strong actions that promised difficulties. Up to now, the real estate market has had more positive signals such as account liquidity increasing again. Accordingly, recently, many investors have had a reduced mentality and started to “hunt” for land.

 

The idea of the investor is based on the current trend of economy when the year comes nearer to the end. In fact, land plots have now decreased by about 20 – 30% compared to the peak of the fever and show no signs of increasing again. Besides, at the end of the year, many businesses have to settle their debts. In case of being stuck, if they have land, they will accept to sell it cheaper to quickly find a buyer. Therefore, at the present time, my group is still buying land at a bargain price.

 

Information from VARS also shows that more investors have begun the journey of “hunting” for land, in areas on the outskirts of big cities, localities with strong infrastructure development and rapid urbanization. Highly urbanized with prices considered to be quite “bargain”, with much room for growth in the future.

 

Source: cafebiz.vn

 

  1. 6. The prospects for the real estate market as the legal framework is perfected

 

The real estate market is currently grappling with challenges, including legal complexities that hinder businesses from executing projects smoothly. Recent amendments to the Housing Law and supportive policies are seen as promising for a swift recovery and sustainable growth.

 

However, issues like stringent project approvals, rising input costs, and capital accessibility persist. Key to the market’s stability is the prompt introduction of approved land funds once fiscal policies and amended laws are in place. Industry leaders like Le Hoang Chau highlight legal complications, which constitute 70% of challenges. Resolving these issues is expected to have a positive impact on the market by the end of next year.

 

The Ministry of Construction plans for the amended Housing Law to take effect in July 2024, with a focus on reviewing policies related to social housing development sooner. The government is actively seeking solutions, urging local authorities to address issues promptly. Vuong Duy Dung emphasizes the need for immediate amendments to legal regulations, echoing concerns from a survey indicating that 70% of businesses feel capital policies have not been effective, emphasizing the ongoing challenge of perfecting the legal framework for a robust real estate market.

 

 

Source: cafef.vn

 

  1. 7. Investors will no longer find it easy to circumvent capital mobilization laws through the sale of undeveloped land

 

The news discusses recent measures to curb circumvention of capital mobilization laws by real estate investors, specifically focusing on the collection of deposits for undeveloped land.
 
Investors have exploited legal loopholes, accepting high deposits without official recognition in the Real Estate Business Law, leading to market instability and disputes. The amended law, passed on November 28, limits deposit collection to 5% of the sale price, with explicit contract terms.
 
The Chairman of the Ho Chi Minh City Real Estate Association supports the restriction to prevent misuse while maintaining substantial value. The article suggests additional requirements, such as bank guarantee letters, to safeguard customer rights and ensure adherence to agreements amid fluctuating property markets.
 

 

Source: laodong.vn

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