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The real estate market in Vietnam has faced numerous challenges in recent years, but experts believe that 2023 will be a turning point for the industry. Legal bottlenecks, lack of capital access, and issues in raising funds from corporate bonds have hindered the market's development. However, there is optimism that these shortcomings will be addressed and the market will begin to recover in the third quarter of 2023.
Addressing Supply-Demand Imbalance
The year 2022 was a tough period for the real estate market in Vietnam. Changes in legal policies and the tightening of bank credit resulted in a market freeze. Property developers, both large and small, had to undergo restructuring to cut costs or delay investment and construction activities. Some even had to borrow capital at high-interest rates outside the banking system to stay afloat. The market experienced a period of depression with a large inventory and a significant drop in liquidity.
Despite the market's low point, there remained a clear supply-demand imbalance, particularly in the lack of affordable housing projects for the low- and middle-income groups. House prices have been steadily rising over the years, making it difficult for many to find affordable housing. To recover and develop the market by 2023, experts emphasize the need for market restructuring, diversifying products, and addressing the supply-demand mismatch.
To tackle this urgent issue, specific and comprehensive solutions are required. These include implementing a long-term national housing program, amending relevant laws and regulations, and increasing the land portfolio for social housing. Additionally, the expansion of credit access in 2022 by 1.5-2 percentage points by the State Bank of Vietnam is expected to inject much-needed capital into the economy. However, it may take until the third quarter of 2023 for the real estate market to fully recover.
A "Bright Spot" on the Horizon
Despite the challenges faced in 2022, the real estate market in Vietnam did not experience the feared crisis scenario from ten years ago. This can be attributed to the reasonable fiscal policies implemented by the government to contain inflation and support the market's recovery. Experts are optimistic about the adaptability of Vietnamese enterprises and the government's efforts.
Looking ahead, with the influx of foreign capital and stable regulatory policies, the market is expected to gradually recover and thrive. In 2023, a stable macroeconomic situation is anticipated, with GDP growth predicted to exceed 7% and inflation to remain below 4%. Legal bottlenecks will be gradually eliminated when the revised Land Law and Housing Law come into force. Issues relating to real estate bond offerings are also being addressed. Thus, investors will have more medium- and long-term investment opportunities.
Real estate enterprises are expected to have a different mindset in 2023, being better prepared to deal with the market's challenges. Legal issues will be resolved, and the new credit room will drive the market forward. Long-term investment will be the focal point for investors, who will eagerly jump into the market once they detect positive signals and find suitable products for their needs.
The government's actions to restore market order are expected to create a more quality, transparent, and healthy business environment. The finalization of laws related to the real estate market will provide a brighter outlook and boost investor confidence. There is high hope for the real estate market in 2023, particularly in sectors such as real estate tourism, industrial parks, and retail. Once the Land Law and Law on Real Estate Business are finalized, investors will have more opportunities to reenter the market.
Conclusion
The real estate market in Vietnam is poised for a transformation in 2023. With a focus on addressing supply-demand imbalances, diversifying products, and resolving legal bottlenecks, the market is expected to recover and thrive. The government's efforts, favorable macroeconomic conditions, and investor interest will contribute to the industry's revitalization. As we look to the future, optimism remains high for a brighter outlook in the Vietnamese real estate market.
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Caption: Locals looking at a property project. Photo: Tieu Thuy
