HCM City’s real estate market shows signs of recovery
Real estate revenue in Ho Chi Minh City reached 173 trillion VND (over 7 billion USD) in the first eight months of the year, up 6.1% year-on-year, according to the HCM City Statistics Office.
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| In Ho Chi Minh City (Source: VNA) |
The city’s real estate market has shown signs of recovery this year, with 3% growth in the second quarter and 2.5% in the first quarter, after a 6.4% decline last year from 2022.
The market hit its lowest point in the first quarter of 2023 with a negative growth rate of 16.2%.
The city’s strategic location and robust infrastructure make it an attractive investment destination for foreigners, particularly its real estate sector, said industry analysts.
Le Hoang Chau, Chairman of the HCM City Real Estate Association (HoREA), said the most challenging phase of the market is likely over, thanks to supportive policies such as earlier access to financing options and reduced loan interest rates.
Industry analysts remain optimistic about the market’s outlook, expecting benefits from increased foreign direct investment in the real estate sector and revisions to the Land Law.
FDI in real estate
Competitive pricing within the property market, particularly in HCM City, has attracted the attention of numerous foreign investors.
Vietnam reported 2.4 billion USD in pledged foreign investment for the real estate sector in the first eight months, according to the General Statistics Office.
The influx of foreign capital, constituting 18% of the country’s total FDI, positions the property sector as the second most attractive sector following manufacturing.
A report by Cushman & Wakefield indicates a favourable outlook for foreign investment in the Vietnamese property sector from 2024 to 2026, driven by low interest rates and various supportive government policies.
Major investors from countries such as Singapore, Hong Kong (China), China, Japan, and the Republic of Korea are increasingly drawn to the high-end and luxury segments of Vietnam.
Over 3,100 new property firms were established during the period, while 814 real estate enterprises exited the local market.
The number of licensed enterprises reached 958, with registered capital totaling 37.4 trillion VND, down 2.3% year-on-year.
Credit growth
Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam's (SBV) HCM City Branch, reported credit growth of 3.9% in the city during the first seven months.
Of that total, real estate credit amounted to 1 trillion VND, up 5.5% year-on-year, and accounts for 27.6% of total outstanding credit.
Real estate credit, which includes social housing and commercial housing, makes up the largest share, or 57% of the city's total outstanding credit.
Lending for social housing reached 2.5 trillion VND (103.4 million USD) during the seven-month period, up 78% over the end of 2022.
Industry analysts expect that the market will benefit from revisions to the Land Law, which took effect on August 1 and aims to resolve legal obstacles for as many as 1,000 projects nationwide.
The revisions are expected to enhance the supply of social housing by incentivising enterprises to invest in this segment.
The revised law permits overseas Vietnamese to purchase property in Vietnam and secure ownership, thereby attracting further investment from this demographic.
However, Chau has noted ongoing challenges, such as an oversupply of high-end housing and a scarcity of affordable housing, particularly social housing.
Experts have also warned of other ongoing challenges, including pressure related to debt repayment, fraud, and other financial scandals.
(Source: VNA)
