Whatever the scenario, the real estate market is better.

According to Associate Professor Dr. Tran Kim Chung, former Deputy Director of the Central Institute for Economic Management, there are three scenarios for the real estate market in 2024. "But no matter which scenario, the market will be better than two years ago," Mr. Chung predicted.

Associate Professor, Dr. Tran Kim Chung, former Deputy Director of the Central Institute for Economic Management

The development of the following year is always based on the foundation of the previous year. Sir, for the real estate market, 2023 is considered by many to be very bad?

If we make a general assessment, it can be said that in 2023, the real estate market will be quite gloomy, but analyzing each segment of the market separately, it is not all gray.

Specifically, in the context of a generally gloomy market, the industrial real estate sector is quite good. This is thanks to the strong growth in attracting foreign direct investment in 2023.

According to the General Statistics Office, newly registered capital, adjusted registered capital and capital contribution and share purchase value of foreign investors in Vietnam in 2023 reached nearly 36.6 billion USD, an increase of more than 32% over the previous year. The mid-range and lower-end commercial apartment segment is also quite good in both selling price and transaction. The segment of super luxury villas and real estate in prime locations has great value, although transactions are few, prices have hardly decreased. The tourism and resort real estate segment is starting to show signs of recovery.

That is, in your opinion, is the real estate market development in 2023 acceptable?

The Vietnamese real estate market was actually formed in 1993 - the time the first Land Law was issued. Through monitoring the real estate market for 30 years, I discovered that every 10 years, the market would repeat the cycle: difficulty - recovery - stability - growth. In particular, the difficult times often fall during the time when the National Assembly considered passing the new Land Law (1993, 2003, 2013). Depending on the conditions, each stage lasts about 2-3 years.

This difficult period of the market started in the second quarter of 2022 and will soon end because in early 2024, the National Assembly passed the Land Law (amended). In 2023, the market is in a difficult period of the "10-year cycle", but it does not decline, does not worsen, but is quite stable, which is a positive point in the cyclical law.

Unlike previous amendments to the Land Law, this time the National Assembly revised both the Housing Law and the Real Estate Business Law, so the return of the real estate market will be stronger. However, all three laws will take effect in early 2025, so in 2024, the real estate market still has three scenarios.

What are these three scenarios specifically, sir?

In the first scenario, if all factors do not change, the market will continue its upward trend, but slowly.

The second scenario is that the market grows strongly when there are shocks.

The third scenario that no one wants, but can still happen, is that the real estate market declines in case the world economy falls into difficulty, world trade declines, foreign investment declines, domestic production and business activities do not recover, investment cash flow into the market, especially bank credit and corporate bonds, declines. But whatever the scenario, the market is still better than 2 years ago.

Of these three scenarios, I lean towards the second scenario, although the legal system for the operation of the real estate market this year has not changed due to the Land Law, Real Estate Business Law and Housing Law newly passed by the National Assembly, which will not take effect until 2025.

Why are you so optimistic?

Realizing the special importance of the real estate market in economic recovery and development, since the beginning of 2023, the Government and the Prime Minister have issued a series of directive and management documents to synchronously implement policies, tasks, and solutions to remove difficulties for the market, especially legal and capital difficulties and problems.

Recently, in Official Dispatch 1376/CD-TTg (dated December 17, 2023), the Prime Minister requested that the continued drastic, timely and effective implementation of solutions to promote the safe, healthy and sustainable development of the real estate market is the responsibility of ministries, branches and localities. Ministries, branches and localities must consider this one of the urgent and important tasks, which need to be focused on solving according to the principle that the problem is under the authority of which level, that level must solve it, absolutely not avoiding, pushing, fearing mistakes, fearing responsibility.

The Prime Minister's working group to review, urge, and guide the removal of difficulties and obstacles in the implementation of real estate projects, headed by the Minister of Construction himself, must be more determined, stronger, more comprehensive, and timely guide and remove difficulties and obstacles in legal procedures, speed up the progress of real estate projects, especially housing projects, large urban areas, and industrial parks with spillover effects; speed up decentralization, authorization, and reduction of unnecessary administrative procedures; resolutely handle cases that cause difficulties, inconvenience, and roundabout handling that cause delays for people and businesses.

But sir, the market operates based on supply and demand, is political determination alone not enough?

The highest legal document directly related to the real estate market has been issued. The Government is urgently completing the guiding decree, combined with the determination of the Government and the Prime Minister, has restored the confidence of businesses, investors and people, which is an important basis to believe that the market will soon recover.

The real estate market has been in recession since the beginning of the second quarter of 2022. According to the "10-year rule", the market recession period is about 1.5-2 years. By the second quarter of 2024, it will be exactly 2 years, the market will stabilize and develop.

The market operates according to the law of supply and demand. Regarding supply, the Government has decided to spend 120,000 billion VND to invest in building at least 1 million social housing apartments for low-income people and industrial park workers in the 2021-2030 period, but this credit package is currently disbursed very little. To increase the supply of goods for the most important segment of the real estate market, the Prime Minister has directed ministries and branches to have feasible solutions to drastically and effectively implement the 120,000 billion VND credit program for preferential loans to develop social housing, workers' housing, and renovate and rebuild apartments.

To stimulate demand, the Prime Minister requested the banking sector to have practical and effective solutions to promote credit lending to BBS enterprises; strengthen direction, urging and guidance of commercial banks so that enterprises, real estate projects and home buyers can access credit sources more easily, promptly resolving difficulties in capital and cash flow.

The Prime Minister has just held a conference with leaders of real estate and manufacturing enterprises such as Vingroup, FPT, Masan, Novaland, Hung Thinh, Sun Group, Geleximco, Taseco, Becamex IDC, Phat Dat... to continue to remove difficulties and obstacles. This can be considered as the "Dien Hong Conference" for the real estate market, many difficulties and obstacles in terms of mechanisms, legality, capital sources, supply and demand of the market will be removed as soon as possible after this conference.

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