Mr. Matthew Lourey, Managing Partner, Acclime Vietnam

Vietnam’s real estate sector remains sluggish, with both confidence and available funding continuing to be in shorter supply than what is needed to offer significant stimulus. However, there are signs of improvement, with quality properties still being sought after and industrial demand still in place.

The knock-on effect of corruption and bond issuance problems that choked the real estate sector last year will take some more time to work through. With these problems come promise, however, as we have seen a much more pragmatic approach in 2023. with authorities reviewing real estate laws and practices and investors taking a different perspective on real estate investing and the risks involved. We have seen banks increasing their exposure to property funding and bond markets taking mature decisions on overstretched developers.

Foreign investors still have a strong interest in investing in commercial property in Vietnam, but there is a limited stock of properties with clear titles, or red books, and which have a reasonable period left on their usage rights. Properties that fit the criteria are sought after, and there is interest.

Residential property is difficult, as although underlying demand remains across the board - from low-end social housing through to the top end - this has not resulted in the transaction volumes it should have due to the nature of the market. As the residential market is dominated by large domestic players, many of which have structural issues, and with high interest rates, among other things, the pent-up demand has not resulted in actual investment levels that could have otherwise been achieved.

The process of land title issuance, which is under review by various bodies at different levels, still presents a problem in practice. Delays and complications in the issuance of ownership documents poses risks for developers, investors, and occupiers. The parties are all less likely to rely upon contracts alone, as they have in the past.

Firms that appear to be better at de-risking properties will succeed above others. Matters like transparency with land ownership and documentation, and methods so that buyer deposits are protected in the development they are invested in, will help these developers and projects stand out. We should also see more developments involving banks as a party to the project, where the bank, developer, and buyer all have greater transparency and portray a higher level of trust with the process.

Reform of the real estate sector is underway. This should include protections for investors, clarity, and speeding up land use right documents, and reforming funding laws in banking and bonds. There is significant movement around these in the market, albeit slow, as all significant changes are, but the desire needs to continue and more needs to be done.

We also need clarity and guidance in addressing expiring land use rights, as many commercial projects in particular are approaching the end period of their rights, and during this time they are not able to be sold or developed. This holds back the market. The market needs more certainty throughout the full ownership period, so that properties don’t get stuck and hold the economy back at the end of their land use rights period.

I doubt the remainder of 2023 will be without significant changes, but I am hopeful that 2024 will show more optimism and action. We are seeing banks offering loans, problem ownership certificates being addressed, and industrial interest remaining strong, which should lead us to an exciting 2024.

Ms. An Nguyen, Senior Director, CBRE Vietnam

We began to see slight improvements in the real estate sector in the third quarter of 2023. In the residential sector, new condominium supply started to increase in the quarter in both Hanoi and Ho Chi Minh City compared to previous quarters, showing the rising confidence of developers in releasing new products. In the third quarter, we also started to see new launches pick up again in cities like Hanoi and Ho Chi Minh City.

In particular, new condominium launches in Hanoi and Ho Chi Minh City stood at 3,000-3,600 units in the third quarter, much higher than the 1,300-1,800 units recorded in the second quarter. Sold units also increased 25-78 per cent compared to the previous quarter. While landed property products remain limited in Ho Chi Minh City due to land bank issues, Hanoi saw new launches during the first nine months of 2023 of more than 2,100 units; almost on par with average levels in 2018-2021. In terms of pricing, residential pricing in the secondary market has begun to stabilize, showing more stable market sentiment.

In the commercial market, new projects, especially in retail, made the market more vibrant in the second half of 2023. The industrial market also continued to witness positive movements in the third quarter. Both the northern and southern regions recorded strong absorption due to expansions by manufacturers in various sectors. In the first nine months of the year, the net absorption rate in northern and southern key industrial markets reached more than 700 ha and 770 ha, respectively, and are forecasted to far exceed 2022 levels. With Vietnam continuing to strengthen cooperation with comprehensive strategic partners such as the US, South Korea, and China, its industrial sector is expected to continue its healthy performance, fueled by FDI flows from major economies.

Though we started to see some signs of improving market performance in the third quarter of the year, the property market still needs to overcome several obstacles to stabilize and continue its development momentum. The market still lacks products that are in demand in the population and among end-users. Therefore, new supply in segments such as social housing and affordable to mid-end condos will help bridge the market gap and improve market stability.

In addition, it is important to streamline the credit granting process for homebuyers to secure mortgages more easily, especially under credit packages on social housing development the government has approved. In terms of legal framework, all market stakeholders, including developers, provincial governments, and homebuyers are waiting for approvals of new regulations such as the revised Law on Housing and Land Law to kick-start their plans. When all changes in the regulatory framework are confirmed, it will help build market confidence and trigger a new cycle of developments.

There are several actions the government could carry out to improve the market situation. Firstly, it is important to facilitate access to funds by developers and homebuyers, by monitoring central bank and commercial bank policies. Secondly, the legal framework, especially the revised Law on Housing and Land Law, needs to be reviewed carefully before officially becoming effective. These regulations will have huge impacts on the real estate landscape and play crucial roles in resolving current issues for developers when conducting land banking and developing projects. Thirdly, there should be a stronger commitment and effort from the government in implementing policies to support the development of affordable housing and social housing.

We do not expect significant changes in the last quarter of this year in terms of market sentiment. In the residential segment, we expected more projects to be launched in the last quarter, capturing the seasonal demand for buying new homes at year’s end, but new supply in 2023 will not surpass the 2022 level and the market will need more time to fully bounce back to pre-Covid’s new-launch levels.

In the commercial segment, we expect stable movements. Absorption is expected to pick up again in the office segment due to the opening of new buildings, while selected new brands are set to open their first stores in Vietnam in the fourth quarter. Meanwhile, the industrial sector is forecast to continue overperforming, fueled by solid demand from manufacturers in all segments.

Mr. Vo Hong Thang, Director of Consulting Services & Project Development, DKRA Group

Compared to the gloom cast over the real estate market in the first half of 2023, it saw signs of recovery in certain segments in the third quarter due to the lowering of interest rates and the removal of obstacles by the government and relevant agencies, aiding the market’s recovery. In particular, in Ho Chi Minh City and neighboring provinces, there was a 2.5-fold increase in new supply of apartments in the third quarter of 2023 compared to the previous quarter.

The consumption of new supply reached approximately 72 per cent, with consumption being 2.8-fold higher than in the previous quarter, for an increase 13 per cent compared to the same period last year. Conversely, resort real estate (resort villas, resort townhouses, and condotels) faced common market difficulties, along with the less-than-expected recovery of the tourism industry, impacting customer psychology and leading to continued low market liquidity.

Along with that, residential real estate segments in densely-populated urban areas and large cities are likely to lead the market recovery in the near future. Opportunities for the next growth cycle remain open for all segments and different areas. The decision to invest in a particular segment largely depends on each individual investor’s knowledge, experience, and “appetite”.

However, project legality has lately been considered one of the major bottlenecks in the real estate market in general and in housing formation in the future specifically. Issues related to project legality currently account for 70 per cent of the obstacles facing projects in the market.

According to figures from the Ministry of Construction (MoC), it is estimated that about 400 projects in Hanoi and Ho Chi Minh City have encountered problems with implementation procedures and these have lasted for many years but are still not thoroughly resolved.

Some of these bottlenecks include challenges in calculating land use fees for the project and inconsistencies and overlaps between the regulations of the Land Law, the Law on Housing, and the Law on Real Estate Business, leading to confusion in implementation.

Capital is also an equally important factor. Though interest rates have been consistently falling in line with directives from the State Bank of Vietnam (SBV), shortcomings and delays in the approval process as well as in disbursement have caused some difficulties for businesses and individuals in accessing bank credit. The psychology of investors is also considered a significant barrier for the recovery and development of the real estate market. Buyers tend to be more cautious in deciding to invest or to take out loans to buy real estate, waiting for market downturns to buy at lower prices.

Since the beginning of this year there have been consecutive documents issued by the government to resolve the difficulties and obstacles in the real estate market, notably Resolution No. 33/NQ-CP on solutions to remove and promote the development of the real estate market, and Decree No. 08/2023/ND-CP amending, supplementing, and abolishing the enforcement of certain provisions in decrees related to the issuance and trade of private corporate bonds, etc. These clearly demonstrate the concern as well as the resolute guidance of State management agencies in their efforts to revive the market.

However, these documents will take some time to be fully implemented in the market and create the necessary prerequisites for the market to gradually recover and make steady progress in the long term. Additionally, if the process of approval for full legal project documents can be shortened, the possibility of real estate credit sources being opened up will increase. This is a cumulative factor for the real estate market to see certain breakthroughs in the future.

The real estate market will not recover in a V-shaped manner but will recover in a U-shaped manner. Recovery momentum will begin with segments with actual demand, high liquidity, and stable cash flows, like social housing, Grade B and C apartments, and land in locations near major economic centers with full utilities, etc., all of which must have reasonable selling prices discounted to actual value.

From now until the first half of 2024 can be seen as the beginning of the next growth cycle in the real estate market. When the directives for resolving legal obstacles take effect, the disbursement rate of public investment will increase and lower lending interest and deposit rates will continue, contributing to creating bright spots in the real estate market.

Mr. Joseph Low, President (Vietnam), Real Estate, Keppel Corporation

We are excited by the many growth opportunities in Vietnam for sustainability solutions. As a global asset manager and operator, Keppel is well-placed to bring in global financial investors, who can contribute capital to fund the development of more solutions and assets that are also smarter and greener. We will leverage our strong track record in the development and operation of such assets to provide critical infrastructure and services for renewables, clean energy, decarburization, sustainable urban renewal (SUR), and digital connectivity to Vietnam.

Beyond real estate and infrastructure solutions, in the areas of SUR and Energy-as-a-Service, Keppel is also uniquely positioned to provide integrated solutions for data centers from clean energy to asset development and operations and management to support for customers’ net-zero ambitions.

Our data center portfolio has a strong international presence, with 32 across Asia-Pacific and Europe. As demand for data storage increases in Vietnam, we see opportunities for Keppel to offer our integrated data center solutions to support Vietnam’s fast-growing digital economy.

These are just some of the many opportunities we hope to explore and build on as bilateral relations between Vietnam and Singapore grow from strength to strength. Singapore and Vietnam enjoy strong economic ties and bilateral trade continues to grow steadily. As Vietnam continues to undergo rapid urbanization, future investment flows from Singapore to Vietnam are expected to remain positive, underpinned by economic growth, an expanding middle class, as well as the Vietnamese Government’s efforts and investments into developing key sectors, infrastructure, and a conducive business environment.

We have had many rewarding partnerships in Vietnam with established players such as Khang Dien, the Sovico Group, and Phu Long, whose local knowledge, experience, and networks have been useful in addressing challenges that foreign players may face. Correspondingly, Keppel’s suite of quality sustainability solutions, international brand name, and access to third party funds for co-investments are a good complement to our local partners’ strengths. We are confident that we can continue to build on these win-win relationships with local partners to turn challenges into opportunities in Vietnam.