Experts “look straight, speak honestly” about the real estate picture in 2024

Social housing needs the hand of the State

PV: 2023 is a year of many difficulties and challenges for the Vietnamese economy in general and the real estate sector in particular. The Government has issued many policies to help the market. How do you evaluate the "support" from policies to the real estate market in recent times?

Mr. Nguyen Van Duc: In recent times, the policies issued by the Government have all had a positive impact on the real estate market. However, the policies issued by the Government have only been to reassure the spirit, not to really intervene deeply, directly and thoroughly, causing the health of the subjects participating in the real estate market.

Real Estate - Experts — Real estate expert Nguyen Van Duc.

However, in my opinion, the “illness” of the real estate market does not lie in the policies but in the enterprises themselves (wrong segment investment, wrong target investment, enterprises “herding chickens” - PV). When the investment is wrong, enterprises borrow a lot from banks, have no ability to solve the problem… then no policy can “save” them. In addition, policies or laws have a certain delay so they cannot be absorbed overnight.

PV: Many opinions say that the Housing Law (amended) has removed the bottleneck of social housing. What do you think about this?

Mr. Nguyen Van Duc: The purpose of social housing is to help the poor have housing. It is a good policy but the important thing is how it is done.

The new regulations in the Housing Law (amended) are more open, helping the poor have conditions to access social housing. However, in my personal opinion, social housing needs the hand of the State instead of relying on businesses.

In fact, many businesses, including us, have invested in social housing, but after a while, they could not survive. At that time, when building social housing, there were administrative procedures, rising prices, bank interest rates, and long construction times, causing businesses to suffer double losses. Therefore, very few businesses invest in social housing today.

We set a target of having 1 million social housing units by 2030, but we do not have the capital or the mechanism to do so. In my opinion, it will be difficult for us to reach the target as planned.

In my opinion, we should develop rental housing and have decrees and standards to develop this segment. Rental housing does not require such high quality as commercial housing, so that the poor can have easier access to affordable housing.

Will real estate escape the doldrums?

PV: Many opinions say that the real estate market is receiving many positive factors and currently has enough good information to start a new cycle. What is your opinion on the real estate picture in 2024?

Mr. Nguyen Van Duc: The real estate market has been taking a turn for the worse since 2022, lasting through 2023, and many people believe that it will pick up again by the end of 2023. However, it has been a gloomy year for the market, as evidenced by the fact that many people have gone bankrupt, companies have gone bankrupt, and their accounts have been locked...

In my opinion, 2023 is a “dark” year for the real estate market. This difficult situation causes real estate businesses to continuously petition the authorities for “rescue” to avoid the market freezing and collapsing.

Over the past few years, due to the impact of Covid-19, many people have been "anxious", even having to spend their savings to serve their lives. They have no savings, no money to buy a house.

We also need to face the reality that, while people are still struggling with their daily lives, the real estate market will continue to be gloomy and it will be difficult to turn to a bright color. Accordingly, from my perspective, in 2024, the real estate market will not be able to flourish as expected, I will say frankly that the market will continue to be gloomy.

PV: Why do you give your perspective that the real estate market has not escaped the gloomy situation?

Mr. Nguyen Van Duc: For many years, real estate businesses have focused on investing in high-end products. They make villas, shophouses, resorts, etc. with expensive prices, increasing by tens of billions of dong in a short time. They make products for the rich, only the tycoons can afford them, without paying any attention to making products for low-income people.

This reality is not only happening in Ho Chi Minh City and Hanoi but also in many other localities. The massively opened projects are not beneficial to the community or society, but they are opened to save themselves. Real estate businesses strongly develop villas, resorts, shophouses, etc. with the hope of making a profit. However, these projects are large-scale, requiring bank loans and widespread bond issuance.

However, in the difficult economic context, businesses are at risk because the efficiency of using this segment is not high, even many places are built and left empty, rented out for 0 VND within 1-2 years; poor liquidity, high interest rates, high maturity pressure make businesses struggle. Figuratively speaking, the high-end real estate market is in a state of "standing still", many projects have failed, investors cannot get their money back. Looking at the actual context, it shows that real estate has gone through a difficult period but there are still many "dark clouds".

Furthermore, the State will soon identify houses and tax the owners of second homes - this is a fatal blow to speculators and money launderers through real estate. Accordingly, those who "hold" real estate will be forced to sell and flee.

In addition, the State has recently tightened credit, causing businesses to struggle. However, in my opinion, this policy is very correct. I will take the case of Van Thinh Phat for example, with hundreds of businesses borrowing capital, leading to many consequences. Tightening the issuance of bonds and bank credit like this is necessary.

In 2024, bank maturity is also a burden for businesses. Many real estate businesses will have to mature banks and bonds while many cash flows are not available, and currently, as far as I know, there are businesses that cannot collect a single dong. Because they invest a lot in the high-end segment, but who still spends money to buy goods? Many businesses "extend their breath" by advising people to extend for 1-2 more years or convert to unsold products. All of these realities have partly shown the picture of the real estate market.

PV: That said, the real estate market in 2024 will continue to face many challenges. Do real estate businesses need to be “rescued”, sir?

Mr. Nguyen Van Duc: In fact, recently, there have been many businesses that have been operating in a speculative and opportunistic manner, disrupting the market. They sell speculative and ineffective products, and if we “rescue” them, it will be unfair to other industries.

Why do we need to “rescue” real estate companies when they do business for speculative purposes without bringing benefits to the community? In my opinion, businesses that do business effectively, have good projects, and aim to develop housing for low-income people should be rescued. Businesses that do not operate properly should be left to the market to decide.

PV: Thank you for the interview!

Ngan Giang

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