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Positive Driving Factors Boosting the Vietnamese Real Estate Market in 2023

The Vietnamese real estate market faced a challenging year in 2022. However, according to experts, the real estate market in 2023 will show bright signals, with a foundation laid from the challenging year of 2022.

2022: The Market Faced Many Challenges

In an interview with Batdongsan.com.vn, Nguyen Van Dinh, Chairman of the Vietnam Real Estate Association, summarized a range of factors that made the Vietnamese real estate market face many challenges in 2022. The unstable global economy and inflation have led to a significant decrease in global consumer demand, affecting Vietnam’s production and exports. In particular, the turmoil of the global economy continues to escalate in the context of political territorial conflicts. This reality makes inflation, although declining, still persist, especially in Europe and America, the base rate is increasing, and the monetary policy is tight.

Ông Nguyễn Văn Đính, Chủ tịch Hội Môi giới Bất động sản Việt Nam
Chairman of the Vietnamese Real Estate

The Vietnamese economy is also affected by the fluctuations of the global economy, causing a general decline in demand for goods. The market lacks raw materials and the cost of inputs is high, affecting business production. Many industrial companies do not renew the lease of some or all of their production items. Thus, the demand for housing decreases due to the impact on people’s income.

However, the housing market still mainly consists of high-end products that are too expensive compared to the average income of the population. In addition to the imbalance of the product structure, the total supply of housing is still not improved and remains scarce. The reason is that the mechanism is still in the process of being revised, many projects are blocked due to conflicting legal regulations, creating bottlenecks for a long time. Social housing supply cannot be implemented just because the laws are not open enough.

Furthermore, the Chairman of the Vietnamese Real Estate Association stated that the market still faces many obstacles such as regulations on planning that lack consistency and conflict with some related laws, making it difficult for localities to implement. Regulations on land and compensation cause difficulties in land transfer and compensation. Tax regulations make it difficult for localities to implement and attract investment.

In conclusion, the real estate market in Vietnam is facing many challenges and bottlenecks due to the impact of global economic fluctuations, scarce supply, and conflicting regulations.

Driving Force of the 2023 Real Estate Market

Despite 2022 being a challenging year for the real estate market, Mr. Nguyen Van Dinh still points out the bright spots of the large-scale economy and considers this to be the foundation and spark of the real estate market in 2023.

In terms of GDP growth, Vietnam’s GDP in 2022 reached 8.02%, the highest in the 2011-2022 period. In attracting FDI, the real estate business still ranks second in the largest FDI investment-attracting sectors in 2022 with a total investment of over 4.45 billion USD, accounting for 16.1%. The capital mainly focuses on the industrial real estate market and some large real estate projects.

Thị trường bất động sản sẽ khởi sắc trong năm 2023
The real estate market will thrive in 2023.

The real estate M&A market records positive signals as it continues to heat up with foreign capital inflows. The market’s capital continues to be supplemented with a total of foreign capital flowing back to Vietnam that is predicted to increase from 2021, reaching 19 billion USD.

Regarding legal framework, Mr. Dinh said that the legal obstacles are in the process of being removed and improved. Specifically, the Government and National Assembly have made comprehensive solutions to remove obstacles for the real estate market, such as the establishment of the Prime Minister’s Task Force; the draft amendment to Government Decree No. 65/2022/ND-CP, amending and supplementing some provisions of Decision 153/2020/ND-CP dated December 21, 2020 on the sale, transaction of individual enterprise bonds in a more open direction, with a more appropriate process; the Government’s Resolution 1164/QD-TTg on removing obstacles for the real estate market and developing housing… These series of actions have and are igniting confidence among investors and buyers in reality.

Regarding market demand, Mr. Dinh said that the demand for housing in the period 2021-2030 will continue to increase, especially in urban areas. The urban population rate is currently around 40% and will increase to around 45% by 2030, requiring an additional 7 million m2 of housing per year. This is an opportunity for businesses to develop projects that are suitable for real-life demand.

Regarding finance, the Chairman of the Vietnamese Real Estate Association stated that the Ministry of Finance has issued Decree 65/2022/ND-CP, which amends Decree 153/2020/ND-CP regarding the sale and trading of corporate bonds in a more stringent control direction, providing a basis for companies to continue issuing bonds.

In terms of construction investment, by the end of 2022, 12 Ministries and 17 localities had an investment disbursement rate of over 80%, with some places even reaching 100%. Through the support package of 35 trillion VND, the development momentum of social housing was spurred. The policy of promoting investment disbursement in construction, in which infrastructure projects occupy a major proportion, will create many economic zones, tourist areas, cities… which will in turn create demand for housing, tourism, services, offices, especially the industrial real estate segment in the trend of transitioning the factories of multinational corporations. “All these changing factors will drive the Vietnamese real estate market to flourish in 2023,” emphasized Mr. Dinh.

Source: An An

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HAUSLAND REAL ESTATE INVESTMENT CO., LTD​
  • Head Office: Level 18, Vincom Center Dong Khoi Tower, 72 Le Thanh Ton St, Ben Nghe Ward, District 1, Ho Chi Minh City.
  • BO 2: LK3-7 Saigon Mystery, Bat Nan St, Thanh My Loi Ward, Thu Duc City, Ho Chi Minh City.
  • BO 3: No 67 – 47 St, Thao Dien Ward, Thu Duc City, Ho Chi Minh City.
  • BO 4: No 9, Le Hong Phong St, Ward 1, Bao Loc City, Lam Dong Province.
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