The year 2023 holds great promise for Vietnam’s real estate market, with expectations of a robust recovery. This resurgence can be attributed to several crucial factors, including the nation’s unwavering political stability, a thriving economy, bolstered by supportive policies, and the untapped potential of the Vietnamese market amidst a backdrop of economic uncertainty. In this article, we will delve into the five pivotal trends that are reshaping Vietnam’s real estate landscape in 2023 and beyond.

Highlight of Vietnam’s real estate market in H1 2023

According to Dr. Can Van Luc, an economist and member of the National Monetary and Financial Policy Advisory Council, the real estate market of Vietnam has encountered numerous challenges since the beginning of 2023. These difficulties arise from key legal principles and funding sources, as well as the burdensome effects of high inflation and interest rates. However, a glimmer of hope emerges on the horizon as the market has experienced a significant recovery since April 2023.

During the seminar “Overview of the real estate market in Q1 2023 and the development of the real estate market in Q2 of 2023,” Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), shared an optimistic outlook that the domestic real estate market will experience positive changes thanks to the implementation of new government policies.

Starting from March 2023, the Government has made four critical decisions that bear immense importance for the market. One such decision is Decree 08, issued on March 5, which allows real estate businesses to issue and mature corporate bonds. This decree serves as a legal foundation for businesses to negotiate with bondholders regarding debt deferment, asset sales at discounted prices, and even asset exchanges for bonds. Since the issuance of Decree 08, the real estate market has witnessed an influx of newly issued bonds amounting to VND 24 trillion, with a significant portion of these funds flowing into the market.

Another pivotal resolution is Resolution 33, issued on March 11, 2023, which addresses various challenges faced by the real estate market and promotes its safe, healthy, and sustainable development. Mr. Luc commended this resolution as remarkably comprehensive, as it tackles obstacles in three crucial areas: legal bottlenecks and loopholes, capital sources, and social housing.

Additionally, Project 338, initiated on April 3, 2023, aims to invest in and construct at least one million social housing apartments by 2030. This project provides a solid legal framework for businesses and localities involved in the development of social housing.

Moreover, Decree No. 10, issued on April 3, 2023, offers guidance on the Land Law and supplements regulations pertaining to the granting of ownership rights for resort real estate.

These recent government policies demonstrate a concerted effort to address the challenges faced by the real estate market. By providing legal clarity, facilitating capital flow, and focusing on social housing development, they lay the groundwork for a more stable and prosperous future. As we move forward, it is expected that the real estate market will regain its momentum and pave the way for sustained growth and positive transformations in the coming months and years.

5 emerging trends in Vietnam’s real estate industry in 2023

The Surge of Social Housing

The residential real estate sector is poised for a remarkable recovery in 2023, primarily due to the persistent demand for affordable housing. Over the past period, the need for affordable housing has consistently remained high. Recent initiatives undertaken by both the government and businesses, such as the “Investing in building at least one million social housing apartments for low-income people and industrial park workers in the period of 2021 – 2030” project, have set the stage for the segment’s resurgence in 2023 and the following years.

The projected surge in the supply of social housing holds the key to addressing the housing requirements of the majority of low-income individuals residing in urban areas and those employed in industrial parks. This development signals a positive shift in market supply, effectively targeting the appropriate audience with genuine housing needs. The addition of millions of social housing units will contribute to resolving the prevailing issue within the housing market, which is an excess of properties in the upper segment and a shortage in the lower segment.

The Rise of Green Real Estate

According to Mr. Nguyen Van Dinh, Chairman of the Real Estate Brokers Association, in the wake of the Covid-19 pandemic, the demand for this green real estate is poised to skyrocket, as individuals yearn for the security of a safe living environment. Consequently, a multitude of customers and investors are turning their attention toward green real estate projects in 2023 and beyond.

At COP26, Vietnam made a resolute commitment to become a net-zero country in terms of emissions by 2050. In line with this ambitious goal, numerous policies have been enacted to review and adjust relevant strategies, master plans, and development blueprints. Simultaneously, these initiatives aim to foster investor interest in Vietnam’s thriving green real estate industry.

However, a recent report from the Ministry of Construction, presented during the Vietnam Green Building Week 2022, paints a sobering picture of the current state of green building development. The report reveals that the country currently boasts only over 233 green building projects, covering a total area of approximately 6 million square meters. This figure pales in comparison to the vast number of projects constructed and brought into operation over the past decade. Therefore, in order to achieve the established goals and keep pace with the global trend towards green and sustainable living, Vietnam continues to anticipate that the green real estate industry will remain an investment hotspot not only in 2023 but also in the years that follow.

The Digital Transformation of Real Estate

The global upheaval caused by the Covid-19 pandemic has acted as a powerful catalyst for digital transformation across various industries. As per the Property Insight Program, Vietnam’s Proptech market has the potential to attract approximately $500 million in investment capital. With legal hurdles gradually being dismantled and capital flows becoming more favorable, 2023 is poised to be the year of significant development for the Proptech market.

The removal of legal obstacles and the improved accessibility of capital have laid a solid foundation for the rapid growth of the Proptech market in Vietnam. As investors recognize the immense potential of Proptech in streamlining real estate transactions and enhancing customer experiences, significant investment inflows are expected to pour into the sector.

The Evolution of House Rental 

In the period from 2021 to the present, the real estate market has witnessed a substantial surge in selling prices, with average price levels soaring by 30-40%. Surprisingly, this upward trajectory has not been mirrored in the rental market, which has struggled to keep pace. As the price levels reach new highs, the buying and selling market experiences a slowdown, prompting investors to redirect their attention to the rental segment.

Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the South region, foresees that the investment flow in 2023 will gravitate towards properties that can be leveraged for rentals, such as apartments, townhouses, and factories. This real estate category offers convenient access to loans and is considered a safe haven within an imbalanced market landscape.

Market realities validate this shift in focus, with a sustained high level of interest in rental properties since the end of 2022. Data from Batdongsan.com.vn reveals that nationwide demand for real estate rentals in the first month of 2023 experienced a staggering 101% increase compared to the same period in 2022.

Several factors contribute to this surge in rental demand. Many customers find themselves financially unable to purchase homes, prompting them to opt for rental accommodations. Additionally, certain groups engage in renting and subsequently subleasing to cater to the growing domestic tourism sector. Moreover, some organizations, having adopted remote work arrangements in 2022, are now returning to the rental market in 2023 to secure smaller premises, typically ranging from 50-70 square meters, within city centers for work purposes. Furthermore, the trend of urbanization is on the rise, with an increasing number of individuals migrating toward urban centers. This phenomenon fuels the demand for apartments and motels, making the rental market a more vibrant and dynamic sector.

Investors switching to construction contractors

In the intricate value chain of the real estate, construction, and building materials industry, businesses often progress from material producers to sub-contractors, general contractors, and ultimately project owners through various stages of growth.

However, faced with financial constraints and increasing competition, a notable shift is occurring as an increasing number of real estate companies venture into providing construction services as contractors instead of undertaking projects from scratch.

This trend has gained significant traction in several countries worldwide, most notably in China. Experts within the industry also suggest that a similar trend may emerge in Vietnam.

This shift towards becoming construction contractors offers real estate companies greater flexibility and agility in adapting to market dynamics. They can capitalize on their industry knowledge and networks to secure construction contracts, forging mutually beneficial partnerships with project owners while optimizing their own operational efficiency.

Final Thoughts

Given the challenges ahead, the Vietnamese real estate industry is anticipated to experience a positive recovery toward the end of 2023. By investing in Vietnam’s real estate market, investors can contribute to the country’s sustainable development goals, capitalize on the benefits of technological advancements, tap into the rental market’s profitability, and participate in the industry’s shifting dynamics. Whether it’s investing in green projects, leveraging digital tools, exploring rental opportunities, or partnering with real estate companies as construction contractors, there are numerous avenues for investors to explore and thrive in Vietnam’s real estate landscape.

To seize these compelling opportunities, investors can utilize Viettonkin’s consulting service as a trusted partner in navigating Vietnam’s real estate market. At Viettonkin, we offer tailored and comprehensive legal and business consulting services specifically designed for investors interested in the Vietnamese real estate market. Our team of experts is well-versed in the intricacies of Vietnam’s real estate landscape, providing strategic advice and practical solutions to help you navigate the complexities of the industry, ensure regulatory compliance, and maximize your investment potential.

By leveraging Viettonkin’s expertise and comprehensive support, investors can confidently invest in Vietnam’s real estate industry and reap the rewards of this dynamic and thriving market.

Contact us today to unlock the full potential of your investments in Vietnam’s real estate market.