Unlocking Vietnam’s $1.5 Trillion Real Estate Market: Experts Highlight Capital Shortages and Infrastructure Bottlenecks Despite Triple GDP Potential

According to Dr. Lê Xuân Nghĩa, the real estate market’s capitalization is several times larger than the GDP. In Vietnam, real estate capitalization has reached approximately $1.5 trillion, triple the national GDP. Notably, housing prices in Hanoi surged by an average of 12% annually between 2009 and 2019, outpacing both gold price increases and inflation rates.

Despite its massive scale, the real estate market remains heavily reliant on bank credit, accounting for about 25% of total outstanding loans. Alternative financing channels, such as corporate bonds, stocks, and housing investment funds, only meet a fraction of the demand. For instance, real estate bonds represent just 20–30% of the corporate bond market, covering a mere 7% of the industry’s capital needs.

To foster sustainable growth, Dr. Lê Xuân Nghĩa advocates for diversifying capital sources. This includes enhancing financial transparency, implementing credit ratings for businesses, and developing housing funds and co-ownership real estate funds to support middle- and low-income earners. Additionally, encouraging innovative financial models can reduce dependence on banks.

While capital acts as the “lifeblood” of the market, infrastructure serves as the “skeleton” shaping its growth. Assoc. Prof. Dr. Architect Nguyễn Vũ Phương, Deputy Director of the Construction Strategy and Personnel Development Academy (Ministry of Construction), highlights the critical role of transportation infrastructure in real estate development.

Over the past decade, Vietnam’s expressway network has expanded from 90 km in 2010 to 1,700 km in 2023, with projections reaching 5,000 km by 2030. Major projects like the Hanoi and Ho Chi Minh City metro systems, Long Thanh Airport, and Cai Mep – Thi Vai Port not only expand development space but also reshape the market through compact urban models, 15-minute cities, and transit-oriented development (TOD).

However, Vietnam faces significant challenges. Annual infrastructure investment needs amount to $25–30 billion, yet funding remains limited. Urban rail projects often face delays, cost overruns, and land clearance issues. The real estate market also grapples with speculative “virtual land fever,” poorly synchronized urban development, and a surplus of high-end properties alongside a shortage of social and worker housing.

International experience underscores the need for seamless integration between transportation infrastructure and real estate for sustainable growth. In Hong Kong, the “Rail + Property” model enables metro operators to develop projects around stations, generating reinvestment funds. Singapore mandates that 20–30% of TOD land be allocated for social housing, allowing 80% of its population to live affordably near the MRT system. Europe’s “15-Minute City” model reduces car dependency and enhances property value through improved quality of life.

Drawing from these examples, Assoc. Prof. Dr. Architect Nguyễn Vũ Phương suggests Vietnam adopt a comprehensive strategy. TOD projects should incorporate social housing and affordable homes, while mechanisms to recapture land value increases from new infrastructure should fund community reinvestment. Pilot “Rail + Property” models in Hanoi and Ho Chi Minh City, combined with functional regional planning (FUA/FRA), can optimize urban, satellite, and ecological real estate distribution, preventing central overburden.

Capital and infrastructure are the “wings” propelling Vietnam’s real estate sector. Overreliance on bank credit or disjointed infrastructure development risks market imbalances, bubbles, and instability. A synchronized strategy—diversifying capital sources while investing in modern, equitable housing infrastructure—will position real estate as a cornerstone of sustainable economic growth.