A building near Bến Thành Market in downtown HCM City whose construction stopped at the end of last year. The market is expected to recover in the second half of the year. — VNS Photo Bồ Xuân Hiệp
The real estate market in HCM City is expected to recover in the second half of the year driven by factors such as foreign direct investment inflows, consumer demand and infrastructure development, experts said.
Lê Hoàng Châu, chairman of HCM City Real Estate Association (HoREA), said the real estate sector faced challenges in recent years but had shown signs of improvement in the first few months of the year.
In addition, foreign investments in real estate had already started flowing into the city, positively impacting the industry’s stock prices.
Real estate firms in the city have been offering preferential programmes to customers, resulting in a significant 21 per cent increase year-on-year in property revenue in the first two months.
The market is expected to fully recover from 2025 onward, driven by the Government’s policies and support from real estate enterprises.
However, experts have pointed out challenges facing the market such as the scarcity of land, high prices, and problems related to legal issues in licensing projects, particularly affecting the townhouse market.
According to Cushman & Wakefield Vietnam, the townhouse market slumped in the previous year due to high prices, leading most investors to adopt a wait-and-watch attitude.
A report by Savills Vietnam predicted this year would see around 1,400 townhouses enter the primary market in the city, with 65 per cent of them costing between VNĐ20 and 30 billion, resulting in low absorption rates.
Recommendations
Lê Hoàng Châu, chairman of HoREA, recommended real estate firms restructure their operations and invest in affordable housing to match people’s incomes.
Real estate businesses must consider reducing selling prices and providing more attractive promotional and after-sales policies to stimulate consumer demand.
Economist Cấn Văn Lực said: “If necessary, they should be willing to cut profits in order to sell real estate at lower prices to ensure a steady cash flow.”
In a related issue, the city has announced plans to build 35,000 social housing units with 2.5 million square metres of floor space by 2025.
Việt Nam is currently grappling with issues in its corporate bond markets, particularly in the real estate sector.
Numerous major developers have missed interest payment deadlines on both domestic and foreign bonds, leading to a standoff with international creditors.
Experts have attributed the problems to a national anti-corruption campaign that the Government stepped up at the end of 2022.
The arrest of the chairwoman of Vạn Thịnh Phát Group over financial fraud at the end of 2022 was a turning point after which market confidence dropped seriously.
The Government has formed a task force involving various ministries and agencies to address all the issues related to the markets. — VNS