“Purifying” real estate products by legal measures

Expecting a "transformation" at the end of 2024

Entering 2024, the real estate market is expected to have a stronger transformation from the low base of 2023. However, there are still difficulties.

According to the Dat Xanh Services Institute of Economics - Finance - Real Estate (DXS - FERI), in the second quarter of 2024, although there are still many difficulties and uneven recovery in all segments, the Vietnamese real estate market is overcoming the most difficult period and starting to record positive movements.

In particular, all types of real estate have improved new supply. New supply in the residential real estate segment has increased but not significantly, and is also affected by objective factors. Accordingly, new supply increased by about 8% compared to the end of 2023; supply mainly comes from new baskets of goods from old projects.

Total national primary supply in the second quarter of 2024 is approximately 45,200 products (total supply is calculated based on actual products that can be put into business, including remaining accumulated inventories, and the number of products eligible for sale newly offered for sale).

The supply of new projects mainly focuses on the mid-high and high-end segments, creating a shortage of affordable housing products, causing the market to lose local liquidity, with excess goods still in excess, while shortages are still lacking. The primary supply in the Southern region is the leading in the country, mainly concentrated in Ho Chi Minh City, Binh Duong, and Long An with about 22,000 products, accounting for about 48.8% of the total new supply nationwide.

For office space, supply is forecast to reach 2.15 million square metres in Hanoi, up 2% quarter-on-quarter; and 2.7 million square metres in Ho Chi Minh City, up 4% quarter-on-quarter. Industrial real estate also continues to grow steadily, with the North expected to add 15,000 hectares, up 3% quarter-on-quarter. The South is expected to add 27,900 hectares, up 1% quarter-on-quarter.

New rental demand will come from the recovery of the manufacturing sector, increased export orders and the entry of many new FDI enterprises. Occupancy rates are stable in the North, and increase very slightly (about 1 percentage point) in the South. Rental rates are competitive compared to other markets in the region.

Mr. Pham Anh Khoi, Director of the Dat Xanh Services Real Estate Economic and Financial Research Institute, said: “The real estate market currently shows many positive signs and is assessed to be on the path to recovery. The market can gradually recover from the U-shaped bottom, however, the speed of recovery depends on both macro and micro factors.”

Also according to Mr. Khoi, looking back at residential real estate in the second quarter of 2024, it is estimated that new supply will increase by 25% compared to the first quarter of 2024, mainly from projects that have been opened for sale or started construction in the previous phase. The expected supply of new products (only counting projects that have plans to open for sale) is about 4,500 products, bringing the total cumulative supply of the whole market to 45,200 products.

According to Mr. Pham Van Binh, General Director of Keyone Land Real Estate Investment and Development JSC, the real estate supply in the second quarter of 2024 has increased significantly compared to the previous period. In particular, in Binh Duong and Long An provinces, the product basket of apartment, land and townhouse segments is being introduced to the market.

“The emergence of supply shows that the market is warming up and there are clear changes. While projects will appear in the second quarter of 2024, investors and distribution companies will have a source of goods to focus on introducing and selling new products to customers instead of selling secondary products as before. The last two quarters of 2024 will open up great opportunities for the real estate market, with supply in full segments to meet customer needs,” said Mr. Binh.

Project legality is the balance for choice

Assessing the market trend in the last 6 months of 2024, Mr. Nguyen Viet Hung, General Director of Westland Trading Joint Stock Company, commented: “Currently, in Ho Chi Minh City, there are almost no apartment, land, or townhouse projects with reasonable prices, but mainly focus on the high-value real estate segment. Therefore, some investors have expanded to areas adjacent to the city such as Long An and Binh Duong to develop projects. This is not a new direction, but it is a bright spot for the entire Southern market.

We can see that investors, or those with real housing needs, will be limited in terms of finance, and high-value products will not be suitable because the profit margin is difficult to meet the demand... Therefore, it is highly likely that in the near future, the mid-range apartment segment priced from 2 - 2.5 billion or land projects, townhouses priced under 3 billion will attract investors," Mr. Hung commented.

According to Mr. Hung, the market trend of investors gradually retreating to the suburbs is inevitable. Firstly, the transport infrastructure connecting the region is increasingly complete, large projects have all been put into construction and are urgently completing the stages, making it easier to move to the central areas.

Second, real estate prices in the area adjacent to Ho Chi Minh City are lower, more suitable and the profit margin is also stable over time. In addition, the legality of the projects is also considered complete, ensuring more safety for investors as well as project buyers for settlement.

Sharing with Nguoi Dua Tin, Mr. Ngo Luu Binh, General Director of Bcons Group said: “In general, the real estate market is currently developing in a more stable direction. That is, investors focus heavily on preparing all legal procedures and potential capital sources of the enterprise for a project. So that when launched on the market, the product is the most standard and gains the trust of investors and customers”.

According to Mr. Ngo Luu Binh, for the apartment segment, it is very difficult to lower prices because of increasing costs. “The market has slowed down for more than 2 years and real estate prices have been calculated by investors to be more suitable and no longer sky-high as before. In the last 6 months of 2024, Binh Duong and Long An provinces are considered the focal point of supply. This is also an opportunity for real home buyers because a series of customer support policies are applied, legal standards are in place... Therefore, investors need to consider buying at this time because house prices will increase and cannot decrease deeply,” said Mr. Binh.

Experts also commented that the real estate market in 2024 has more positive signals than in 2023. Many survey results show the prospects and recovery of market segments such as: Industrial development needs, real housing needs, suitable for people's financial conditions will recover first; housing and apartment segments.

Real Estate Business Law helps the market develop healthily and safely

According to legal experts, the revised Law on Real Estate Business (passed on November 28, 2023), the revised Law on Housing (passed on November 27, 2023), and the revised Law on Credit Institutions (passed on January 18, 2024) have initially had a positive impact on the psychology of the subjects, creating momentum for the real estate market to recover soon.

In the last months of 2024, when the revised laws officially take effect, it is forecasted that the real estate market will develop in a safer, healthier and more sustainable direction. In particular, the regulations towards removing difficulties for investors and social housing buyers in the new laws, when officially effective, will attract businesses to participate in development, promote the supply of social housing, and help people get closer to their dream of settling down.

Source: https://www.nguoiduatin.vn/thanh-loc-san-pham-bat-dong-san-bang-thuoc-do-phap-ly-a668828.html