New law takes effect, real estate investors change their "taste"

Real estate project investors are increasingly paying more attention to the project's legality and ability to meet real housing needs - factors that help minimize risks and ensure sustainable value for the investment.

New law takes effect, real estate investors change their "taste"

Real estate project investors are increasingly paying more attention to the project's legality and ability to meet real housing needs - factors that help minimize risks and ensure sustainable value for the investment.

Customers visit houses at Novaland's Aqua City - a project that has just had its legal problems resolved. Photo: Le Toan

Legal priority

In 2018, due to the need to buy a house to live in, Mr. Nguyen Trung Thanh researched and chose an apartment in a project in Nam Rach Chiec Residential Area (An Phu Ward, District 2, now Thu Duc City, Ho Chi Minh City). The project has a scale of 12 apartment buildings, 33-35 floors high and a total of 3,175 apartments.

According to Mr. Thanh, at that time, the investor signed a contract in principle to purchase an apartment with customers, the initial deposit was 250 million VND/apartment, the selling price was 38 million VND/m2. Due to legal procedures, the investor could not open for sale as planned. Recently, after efforts to remove obstacles from the local government, the project was granted a construction permit.

However, the investor unilaterally announced the termination of the contract in principle and committed to pay 15% interest per year on the amount the customer has paid. If the customer still wants to continue participating in the project, the two parties will proceed to liquidate the contract in principle. After the project is qualified to be put into operation, the customer will receive a 15% discount on the new selling price.

The reason given by the investor is that the previous agreements are no longer in accordance with current legal regulations. Specifically, changes in legal policies after the Land Law 2024, Housing Law 2023 and Real Estate Business Law 2023 take effect from August 1, 2024 require products of the project to meet sufficient conditions to be put into business.

Up to now, the project's products have not yet met the business conditions as prescribed in Article 24 of the 2023 Law on Real Estate Business. In addition, according to Clause 1, Article 8 of the Law on Real Estate Business, real estate business that does not meet the conditions is strictly prohibited. Therefore, the previous practice of the investor putting the product into business through the form of concluding a "principle contract on guaranteeing the right to purchase future apartments" with customers is no longer appropriate and does not comply with current legal regulations.

“From a legal perspective, the investor’s actions are not wrong, because they have agreed to compensate for the interest on the deposit. But from an investment perspective, even though they receive compensation, customers are still the disadvantaged party, because current real estate prices have increased many times compared to 6 years ago,” said Mr. Thanh.

From the above “lesson”, the “taste” of investors has also changed a lot. Instead of buying in bulk like before, investors are prioritizing projects with full legal documents to manage risks. Some other investors choose to buy products that already have red books or certificates of ownership.

“Projects must have complete and clear legal documents to attract investors to invest at this time. With land products in the community, investors only agree to survey or buy when the land has been divided into plots and has a separate certificate. Projects in the process of applying for land division procedures hardly attract the attention of investors. This is a clear change in the way investors evaluate products recently,” said Ms. Tu, a broker in Ho Chi Minh City.

In addition, Ms. Tu added that the new regulations on land division are making many investors feel hesitant. Meanwhile, in the previous stage, many investors were "fooled" when buying land and hoping to apply for land division and issue certificates, but then encountered legal problems. Therefore, at present, they are very cautious and are no longer as easy-going as before.

Focus on the ability to meet real needs

According to the reporter's observations, investors today not only look for products with clear legal value, but also focus on the feasibility of long-term asset use, ensuring stable investment value.

It is not uncommon for customers to have their contracts “canceled” by investors when there are fluctuations in the market. Because if the contract with the customer is maintained, it is likely that the business will no longer make a profit, or even suffer a loss…

Projects with high liquidity, easy to rent or serving real housing needs are being prioritized. This reflects the shift from short-term investment to products with long-term use value. Specifically, apartments and townhouses with good locations, complete infrastructure and close to public utilities are being chosen by many investors.

In addition, products with business exploitation potential such as commercial premises, shophouses or land in areas with strong development potential are also receiving great attention.

“Investors today not only appreciate the potential for profit from increasing real estate values, but also consider the ability to generate stable income from leasing or commercial activities. This helps them optimize profits and minimize risks in the context of market fluctuations,” said Mr. Tran Khanh Quang, General Director of Viet An Hoa Real Estate Investment Company.

Mr. Duong Minh Thong, Director of Duong Minh Real Estate Consulting and Services Co., Ltd. also said that in the current context, the real estate segment that meets real housing needs receives great attention thanks to its high safety factor. Land products, especially land without residential land, have not yet attracted much attention.

Giving advice to investors, Mr. Thong said that although housing projects are often not given much attention by investors, through the ups and downs of the market, these are products with reasonable value and the ability to retain or increase value well over time. In terms of risk management, real estate in projects has clearer legal status when it is planned synchronously and systematically, implemented by reputable investors, and is not as risky as land plots that are self-divided among the people.

Source: https://baodautu.vn/batdongsan/luat-moi-co-hieu-luc-nha-dau-tu-bat-dong-san-thay-doi-khau-vi-d230994.html