Being a senior expert in real estate, lawyer Truong Thi Hoa – Vice Chairwoman of the HCMC Real Estate Association (HoREA) – commented that the basic legal trouble is overlapping regulations of various ministries and localities. For instance, even when a business prepares sufficient finance for tax duty, it still cannot fulfill it as functional agencies have not finished assessing the prices of related land lots.
So far, many localities like HCMC, Dong Nai Province, or Binh Duong Province have established task forces to tackle issues for real estate businesses, alongside with the central-level team of the Prime Minister. Yet these teams have not lived up to the expectation, and thus in need of drastic measures from all relevant ministries to eliminate overlapping and inadequacies.
Head Pham Dang Ho of the Division of Housing and Real Estate Market Development (under the HCMC Construction Department) informed that in 2023, real estate activities saw a minus development rate of 6.38 percent. Even though the most troublesome time of the real estate market has passed, there are still two major legal problems.
Firstly, it is not simple to solve issues for real estate projects affected by multiple legal regulations, many of which are not in compliance with newer laws. The proposed solutions from different ministries to some extent are not consistent with one another.
Secondly, there is trouble in identifying land prices, land use prices, and additional financial duties of investors. The last one is of extreme importance since without fulfilling it, it is rather challenging to either attract more capital or sell apartments in the future. In the worst case, the project has to temporarily halt.
As a result, the most critical step right now is to complete necessary legal foundations and systemize a clear procedure to carry out a project, comprised from various laws for administrative simplification. The HCMC Construction Department should consult related state agencies for consistent legal regulations to address newly arisen problems more conveniently, stressed Head Dang Ho.
Another expert opinion is that in the short time, there will not be any significant improvements in the real estate market. Hence, investors in this field must adjust their intentions and offered products. Reasonable housing, especially those in major cities or in traffic-effective areas, is going to become hot sales and lead the recovery stage.
In the recent regular meeting of the Government at the end of 2023, the Prime Minister asked that concerned localities have to complete 130,000 pieces of social housing under the monitoring of the Construction Ministry this year. This will be another positive factor for the recovery of the real estate market.
Moreover, in the last half of 2023, liquidity improvements were witnessed in certain accommodation projects thanks to their prestigious investors, high-quality products with reasonable surface area, convenient location, full facilities, and attractive prices.
Yet such projects are not the majority. Most real estate businesses now have to restructure their budget allocation and money flow in order to not be left behind. Also, in 2024, along with the 2023 Real Estate Law, the 2023 Housing Law, the amended Land Law when approved will be a strong boost to the recovery of this market.
Dr. Can Van Luc, member of the National Advisory Council for Monetary Policies, shared that according to Resolution No.33/NQ-CP by the Government on ‘Certain Solutions to Resolve Difficulties and Promote the Real Estate Market to Develop Safely, Healthily, And Sustainably’, the State Bank of Vietnam is assigned to launch a credit scheme worth VND120 trillion (US$4.9 billion) among commercial banks, especially the four state-owned ones (Agribank, BIDV, Vietcombank, VietinBank).
This serves both investors and buyers of social housing, worker housing, old apartment block rebuilding projects. The loan rate is at 8.7 percent and 8.2 percent per year in three years and five years for the former and the latter respectively. The time to enjoy this preferential rate is no longer than the initial loan time. The disbursement time lasts from April 1, 2023 to December 31, 2023.
However, the disbursement process of this package was not as quick as expected due primarily to a lack of supply, as stated by the Construction Ministry and the Vietnam State Bank. In addition, even after applying the preferential benefit, the loan rate is still rather high to the public and businesses.
Thus, the Prime Minister has asked the Finance Ministry and the Construction Ministry to study the possibility of establishing a social housing fund, mobilizing the contribution of both domestic and foreign investment sources.
Director Le Hoang Phuong of the Product and Business Development Department of Danh Khoi Group commented that any accommodation projects that satisfy legal requirements and have a clear construction roadmap are a priority of buyers and investors. Many real estate businesses are now using these elements to overcome existing obstacles for success in the 2024-2030 period.
The Construction Ministry has reported to the Prime Minister about 108 social housing projects promised to finish in 2024 in all 63 provinces. This will offer more than 47,500 apartments for those in need, including 1,200 in Hanoi and 3,800 in HCMC. The targets of these localities in the 2021-2025 period are over 18,700 and 26,000 apartments, correspondingly, in accordance with the project to build 1 million social housing items by the Government.
