Seize the opportunity to "turn around"

Real Estate 2023: Rising from the bottom

The real estate market has gone through a difficult and challenging year. After two years of uncertainty due to the Covid-19 pandemic, the real estate market is expected to soon recover and trade as vibrantly as before the pandemic.

However, a series of problems from the business environment, capital, legal issues, land funds, etc. have caused the real estate market in 2023 to not perform as expected.

In the special report "The current health status of the Vietnamese real estate market" published by the Vietnam Association of Realtors (VARS) in June 2023, this unit compared real estate businesses to "drowning people", although they have tried to gradually eliminate factors that reduce their weight, they still do not have enough strength to "rise up".

At the same time, the report also predicted that if the difficulties continue, about 23% of real estate businesses will not be able to maintain operations until the end of the third quarter and only about 43% of businesses will survive until the end of 2023.

Up to now, the numbers have gradually shown the dim reality of the market. According to data from the General Statistics Office, in the 11 months of 2023, the whole country had 4,312 newly established real estate businesses with a total registered capital of VND 247,054 billion, equivalent to only 52.6% and 57.1% compared to the same period.

Meanwhile, the number of enterprises that have completed dissolution procedures is 1,160, an increase of 107.3% over the same period. Regarding attracting foreign investment capital into the real estate market, as of November 20, the real estate business attracted more than 2.87 billion USD in FDI capital, down 31.4% over the same period.

Real Estate - Real Estate 2024: Seize the opportunity to — Mr. Nguyen Van Dinh - Chairman of Vietnam Association of Realtors (VARS).

Sharing about the above situation with Nguoi Dua Tin , Mr. Nguyen Van Dinh - Chairman of VARS said that it was "very sad" to witness that in the first two quarters of 2023, a series of businesses as well as real estate brokers left the market.

“By the third quarter of 2023, although the health of real estate businesses has shown signs of improvement, on average more than 100 businesses will still leave the market each month,” Mr. Dinh said.

Citing a VARS report, Mr. Dinh said that by the end of 2023, up to 70% of real estate brokers had changed jobs or left the industry recently. Previously, the number of real estate brokers operating in this field reached about 300,000 people. However, due to the impact of market fluctuations, only about 100,000 people continue to operate.

Businesses must find opportunities in adversity

Dr. Can Van Luc - Chief Economist of BIDV and Director of BIDV Training and Research Institute, Member of the National Financial and Monetary Policy Advisory Council said that in the last months of the year, the National Assembly passed the Housing Law 2023 and the Law on Real Estate Business (amended), and the Land Law (amended) may be passed in 2024.

“This is unprecedented when all three important laws related to the real estate market were passed at almost the same time, which will certainly create big changes,” Mr. Luc commented.

However, Mr. Luc said that the real estate market in the coming time will still have to face many potential challenges such as the slight recession of the world economy and slow growth, which directly affects a country that is open and strongly integrated like Vietnam.

Although interest rates have decreased, they are still basically anchored at a high level, and risks in the international financial and monetary markets have increased, negatively impacting the domestic market.

Meanwhile, disbursement of the 2022-2023 Recovery Program and public investment is currently uneven, real estate businesses are still "flooded" with difficulties in legal matters, cash flow, human resources, etc.

In addition, the risk of the corporate bond market - a strong source of capital "fueling" real estate - still needs a lot of time to be processed and sanitized. However, the corporate bond market cannot recover quickly, in 2024 there will be about 23,000 billion VND of bonds maturing.

Accordingly, Mr. Luc said that in the current context, real estate businesses must "accept" and "be determined".

Firstly, accept to reduce real estate selling prices, diversify capital sources, expand markets and segments to reduce risks, proactively approach and implement related laws (land, housing, real estate business, etc.).

Second, determined to restructure personnel, control cash flow risks, interest rate risks, exchange rate risks and prepare specific, feasible plans for corporate bonds that will mature next year.

Forecasting the future, VARS Chairman Nguyen Van Dinh said that in 2024, the real estate market is expected to open up many new opportunities when basic existing problems are resolved.

Therefore, real estate businesses need to quickly seize opportunities, proactively follow market developments to "turn around" at the right time.

In the coming time, Mr. Dinh commented that real estate prices will increase at different rates in different regions and markets, mainly depending on the balance of supply and demand, but the market will certainly have more signs of "warming up".

“Since the third quarter of 2023, the real estate market has sent out many encouraging signals, thereby creating momentum for the real estate market in the fourth quarter of 2023 and the first quarter of 2024 to have a clearer chance of recovery,” Mr. Dinh acknowledged .

Resolutely promote the safe and healthy development of the real estate market

In Official Dispatch No. 1376 dated December 17, 2023, Prime Minister Pham Minh Chinh directed the Ministry of Construction to resolutely handle cases causing inconvenience and delays for real estate enterprises; requested the State Bank to continue researching and finding feasible solutions to effectively implement the VND 120,000 billion credit program; the Ministry of Natural Resources and Environment to continue to perfect the Land Law (amended), immediately establish specialized Working Groups to urge and guide localities to resolve difficulties and the Chairmen of the People's Committees of provinces and centrally-run cities to direct competent agencies to focus on further accelerating the progress of investment procedures, and will be responsible to the Prime Minister if there are delays in the progress of investment projects...

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