Lesson 1: Legal problems, lack of supply
According to the Ho Chi Minh City Real Estate Association (HoREA), support policies, along with the support of businesses and management agencies, not only bring about strong recovery opportunities but also reshape the market structure, towards a long-term development vision.
Remaining challenges
According to a report from the Ho Chi Minh City Statistics Office, real estate revenue in 2024 will reach VND199,155 billion, accounting for 60.3% of total revenue from “other services”, with a positive growth rate of 6.7%. However, according to the Ho Chi Minh City Real Estate Association (HoREA), this growth cannot hide the fact that difficulties have persisted for the past 4 years, with many projects stalled or delayed.
However, the efforts to remove legal obstacles from the Government and the Ho Chi Minh City People's Committee have brought about certain results, such as the settlement of 64 projects in 2024, of which 8 projects have been completed. However, more than 100 other projects have not been resolved, seriously hindering new supply to the market.
Mr. Le Hoang Chau, Chairman of HoREA, said that the fact that more than 100 projects are stuck in unresolved legal issues not only blocks the supply of new housing, but also seriously affects the product structure in the market. The high-end housing segment continues to dominate, while the demand for mid-range and affordable housing is increasing.
In addition, delays in approving social housing projects have had serious social consequences. Low- and middle-income earners are unable to access affordable housing, increasing inequality in access to urban resources.
Notably, Ho Chi Minh City has only 12 housing projects approved for investment in 2024, much lower than the average number of 60 projects/year before the COVID-19 pandemic. Of these, only 1 social housing project was approved, showing a serious stagnation in the development of the affordable housing segment.
In addition, no projects have been allocated land or leased land, and only two commercial housing projects have been granted construction permits. Complicated legal procedures, from investment approval, approval of detailed planning 1/500 to land valuation, continue to be major barriers to market development.
On the other hand, the real estate market in Ho Chi Minh City is also affected by a series of unsynchronized legal policies. Regulations on project appraisal under the Land Law, Housing Law and related decrees have not really created favorable conditions to resolve legal barriers. The implementation of new mechanisms such as Decree 115/2024/ND-CP and amendments to the Planning Law and Investment Law are expected to be a turning point, but it will take more time to put them into practice.
Not to mention, real estate businesses are currently facing great pressure from a lack of investment capital. According to estimates, the total value of corporate bonds maturing in the real estate sector in 2025 could reach VND180,000 billion. This has forced many businesses to delay or completely stop ongoing projects, creating a vicious cycle that stagnates the market.
Imbalanced supply, rising housing prices
In 2024, the Ho Chi Minh City market will have only 31 commercial housing projects under construction, with a total of 31,167 apartments, a sharp decrease compared to the previous annual average. Notably, only 4 projects are eligible to mobilize capital, with 1,611 apartments, all in the high-end segment. This is the first time in the history of the market that there is no longer any supply for the mid-range and affordable housing segment.
In addition, the real estate product structure is falling into an "inverted pyramid" situation, when high-end housing accounts for 100% of supply in 11 months of 2024, compared to 70.6% in 2020. Meanwhile, affordable housing - the segment with the greatest demand - has completely disappeared from the market.
This serious imbalance has led to uncontrolled increases in housing prices. The average price of luxury apartments is VND9.39 billion/unit, not including costs arising in the secondary market. In central areas such as District 1 and District 3, housing prices continue to climb, while Thu Duc City and Binh Chanh District still lack new projects, deepening the gap between housing prices and people's ability to pay.
In addition, the Ministry of Construction forecasts that, with the adjustment of the land price list in 2024, housing prices may continue to increase by 15 - 20% in 2025. This price increase not only reduces the opportunity for home ownership for the middle and low-income groups, but also increases the inequality gap in access to housing in large urban areas such as Ho Chi Minh City.
Despite many difficulties, the real estate market in Ho Chi Minh City is still expected to recover if legal issues are thoroughly resolved. Areas such as Binh Chanh, Nha Be and Thu Duc City with large land funds and improving traffic infrastructure can become the main growth drivers.
Key projects such as Metro Line 1, Ho Chi Minh City - Moc Bai Expressway and Ring Road 3 are expected to not only help connect the central area with the suburbs but also create development opportunities for satellite cities such as Long An, Dong Nai and Binh Duong.
However, to take advantage of these potentials, legal bottlenecks need to be resolved soon. Ho Chi Minh City needs to strengthen the connection mechanism between management agencies, shorten the processing time for investment projects; at the same time, monitoring housing prices and balancing the product structure in the market also need to be focused on to ensure sustainable development.
Last article: Untie the knot, seize the opportunity to break through
Source: https://doanhnghiepvn.vn/kinh-te/thi-truong-bds-tp-ho-chi-minh-bai-1-vuong-mac-phap-ly-nguon-cung-hut-hoi/20241227094719406
Comment (0)