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Remove legal barriers to help open the real estate market. Photo: H. Anh

Legal leverage opens the market

With the exception of the Covid-19 pandemic, in 2020, good news cameto the real estate market when a series of important legal documents were amended and issued, removing many shortcomings that have existed in the real estate market for a long time, causing difficulties for investors in project development.

In mid-2020, the Law on Investment and Construction Law (amended) wereissued by the National Assembly and came into effect on January 1, 2021. Atthe end of 2020,Resolution 164/NQ-CP issued by the Government wasa boost to the real estate market, removing the legal bottleneck for hundreds of projects that were stagnantfor a long time.

In particular, the Government has just issued Decree 148/2020/ND-CP dated December 18, 2020 on “Amending and supplementing a number of decrees detailing the implementation of the Land Law”, taking effect fromFebruary 8, 2021.

This Decree will remove many problems in the practice of implementing the Land Law 2013. Mr. Nguyen Manh Ha, Vice Chairman of Vietnam Real Estate Association,hopes these policies willremove bottlenecks for the realestate market, bringing new development opportunities.

“Decree 148/2020/ND-CP together with the Investment Law 2020 and Construction Law (amended) 2020, effective from January 1, 2021, in combination with the amendment and supplementation of a number of articles of the Housing Law, the Law on Real Estate Business, the Law on Environmental Protection, stipulating mechanisms and policies in line with reality, continuing to build a transparent, fair, equal, and healthy business environment and remove many problems and bottlenecks in construction investment processes and procedures for thousands of investment projects and housing projects throughout the country, contributing to the "dual goals" that the Prime Minister set out of both effective prevention and control of the Covid-19 pandemic, recovery and sustainable economic development,” said Mr. Le Hoang Chau, Chairman of the HCM City Real Estate Association.

Mr. Bui Van Doanh, Director of Vietnam Real Estate Research Institute, said that besides the obstacles, there are many factors that can become adriving force for the real estate market in the current context. Accordingly, in 2021, when entering a new term, many projects to amend the law are expected to be completed, problems on legal policies inhibiting the development of some products andsegments of the real estate market will be removed.

Thishelps to clear the flow of the market, while business activities and project development are also more prosperous. Moreover, the Government continues to direct research and promulgate many new market support policies and newly issued legal documents that contribute to solving outstanding problems with projects from 2019.

Many powerful levers

According to Mr. Bui Van Doanh, in addition to the removal of legal obstacles, the real estate market in 2021 has other powerful levers. Accordingly, the land fund for businesses and investors is still abundant. Looking closely, we can see that the enterprises that exist in the current period are all companies that own a huge land fund, such as Vingroup, Van Phu - Invest, Novaland and CEO Group.

Besides, new urban areas still have a lot of room for development, such as Thai Nguyen, Yen Bai, Lao Cai, or Buon Ma Thuot, QuyNhon, NinhThuan, BinhThuan, Quang Nam, Quang Ngai and many developers have been aiming to exploit the potential of these areas, such as Capital House and FLC.

At the same time, the capital flow is expected to continue pouring into the real estate market through many different channels. In addition to FDI capital and the mobilization of corporate bonds, another channel that is expected to support the real estate market in the next year is that deposit and lending interest rates are continuously decreasing, showing that commercial banks are experiencing difficulties because there are no borrowers. When interest rates drop sharply, banks will surely give priority to choosing real estate lending channels, because they can still generate profits.

Commenting on promising real estate segments in 2021, Mr. Nguyen Manh Ha said that residential real estate will always be a segment with potential growth in the medium and long term. However, in the future, there will be new segments with more potential for development, in which, the next five years will be the period for industrial real estate to welcome many new opportunities thanks to the trend of relocating factories. In Vietnam, this will be a bright segment for the real estate market in the next five years.

Along with that, the housing segment for workers in industrial zones will be very large. In the North, the localities with great potential for industrial property development are BacGiang, Thai Nguyen and HaiPhong. In the South, the provinces of the Southeast, TayNinh and Tien Giang will be the key areas.

According to Ms. Hoang Nguyet Minh, Deputy Director of Investment Consulting (Savills Hanoi), the Government advocates to continue to encourage the upgrading of industrial zones and the possibility of piloting a number of industry clusters to form production networks, supply chains and deeper participation in global value chains in some localities, creating a positive impact on the industrial park real estate market.

Besides the prospect of industrial park real estate, real estate ina resort model combining tourism, entertainment and synchronous on-site healthcare is also expected to have a chance to recover and develop strongly.

“Although real estate is the most affected segment this year, there is a problem ofhow to stimulate and attract domestic consumption, this is an opportunity for the resort real estate segment to recover and thrive again,” said Ms. Hoang Nguyet Minh.