The Catalyst for the Real Estate Market
After more than 30 years of implementation, the old Land Law has revealed many shortcomings, leading to abandoned land, ownership, unreasonable land prices, affecting the rights, livelihoods, and budgets of land owners. Therefore, the Land Law (amendment) enacted since January 2024 has added many new provisions to better protect the legitimate rights and interests of land users, improve land use efficiency, clearly separate land finances, stabilize land rent, and enhance state management effectiveness in the field of land.
The real estate market welcomes positive signals since the beginning of the year.
With the newly added and improved provisions, the Land Law 2024 is expected to overcome the obstacles related to land transfer mechanisms, leading the construction industry and the real estate market to develop after a long period of stagnation. Furthermore, it aims to eliminate the existing “gaps” and promote social balance and equity, creating a healthy legal environment that is suitable for the fast-changing real estate market.
Ahead of the effective date of the new Land Law, at the beginning of 2024, a series of real estate businesses recorded revenue and profit. For example, Vinhomes Joint Stock Company (VHM) achieved a 228% increase in net revenue in Q4 2023 compared to Q1 2022, with an after-tax profit of 33.3 trillion VND, surpassing the planned target by 14%. Similarly, Hai Phat Investment Joint Stock Company (HPX) recorded a Q4 2023 revenue of 502.6 billion VND, a 54% increase compared to the same period last year; and Phat Dat Real Estate Development Joint Stock Company (PDR) achieved a Q4 2023 net revenue of 68 billion VND, a 353% increase compared to Q4 2022…
According to the data from the Hanoi Stock Exchange, by the beginning of 2024, 35 real estate companies had repurchased outstanding bonds, with a total payment amount of over 20 trillion VND.
Notably, considered as a leading segment of the real estate market in 2024, Vinhomes Joint Stock Company has commenced the construction of two NOXH Happy Home projects with a scale of over 100 hectares in Hai Phong City and Khanh Hoa Province. These projects, upon completion, will provide more than 7,600 units to the market. Many other companies, such as BIC Vietnam Company, planned to build two Rice City projects: To Huu (711 units) and Long Bien (600 units); Newland Company expected to commence the Tan Phu Hung project, which has a scale of 1,260 units…
According to statistics from the Vietnam Real Estate Association, there will be more than 108 NOXH projects, with a scale of over 47,500 units to be completed in 2024. These projects are registered by localities, and they are expected to supplement the supply in this segment for the market this year.
Scenarios for the Real Estate Market
According to Deputy Minister of Construction Nguyen Van Sinh, despite some positive signals, the real estate market will still face many difficulties and challenges in 2024. To facilitate a quick recovery, the Ministry of Construction expects real estate companies to proactively mobilize capital for specific project development, reduce financial leverage, limit scattered investments, focus on completing unfinished projects, especially NOXH projects and affordable housing segments, in order to increase liquidity and meet the real housing needs of the people.
According to real estate experts, during the period of 2024-2025, the “bottlenecks” in real estate project approvals will be resolved, and the real estate market will recover when the Housing Law, the Real Estate Business Law, and the Land Law (amendment) are implemented on schedule and take effect in the second half of 2024.
Associate Professor Dr. Nguyen Kim Chung, former Deputy Director of the Central Economic Management Research Institute, has proposed three scenarios for the real estate market in 2024. If the policies affecting the market do not have any unexpected changes, the market will continue to recover slowly. A rapid and strong recovery of the market is the “desired scenario,” but it requires three supporting factors: increased foreign investment capital in the market, completion of documents under the three enacted laws, and loosening of financial monetary tools. A declining real estate market is not desired by investors if there is no resources and motivation for development. The scenarios are based on forecasts of economic development, and the level of investment capital in the real estate sector is expected to increase in 2024.
From a state management perspective, the Ministry of Construction will focus on implementing five solutions: removing policy obstacles and promoting the safe, healthy, and sustainable development of the real estate market; improving guidance documents for the recently passed laws; enhancing capital access for the real estate market through the 120 trillion VND credit package; focusing on the development of NOXH projects; and effectively implementing Resolution 33/CP on solutions to promote the real estate market.
In addition, Hoang Hai, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction), noted that the new regulations of the laws related to the real estate market represent significant policy progress, providing essential legal frameworks to address long-standing issues. Particularly, the amended Land Law has been evaluated as appropriate, practical, ensuring consistency and coherence with other relevant laws.
