A view of HCM City. — Photo baodautu.vn

Real estate revenue in HCM City reached VNĐ124 trillion (US$4.9 billion) in the first half of the year, up 6.1 per cent year-on-year, according to the HCM City Statistics Office.

The real estate market has shown signs of recovery this year, with 3 per cent growth in the second quarter and 2.5 per cent in the first quarter, after a 6.4 per cent 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 per cent.

Lê Hoàng Châu, chairman of the HCM City Real Estate Association (HoREA), said the market continues to face challenges such as an abundance of high-end housing and a shortage of affordable housing, particularly social housing.

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.

Foreign direct investment in the property sector was up 70 per cent year-on-year to reach over $1.98 billion as of the end of May.

The influx of foreign capital, accounting for 18 per cent of total FDI, makes the property sector the second most attractive sector after manufacturing.

HCM City’s strategic location and robust infrastructure make it an attractive investment destination for foreigners, particularly its real estate sector, said industry analysts.

Competitive prices in the property market, especially in HCM City, have lured the interest of many foreign investors, they noted.

A report by Cushman & Wakefield has noted a positive 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, mainland China, Japan, and South Korea are increasingly interested in the high-end and luxury segments in Việt Nam, with Singapore leading the way with nearly $3.25 billion in investments in the first five months, according to the report.

Industry analysts also expect the market to benefit from the revisions to the Land Law to take effect on August 1.

They are expected to increase the supply of social housing by encouraging enterprises to invest in the segment.

They will particularly benefit two main groups: overseas Vietnamese and individuals who are resettled and have received compensation.

It allows overseas Vietnamese to buy houses in Việt Nam and get ownership, which is expected to attract more investment from them.

It also stipulates that resettlement areas must meet conditions related to technical and social infrastructure.

A building near Bến Thành Market in downtown HCM City whose construction stopped at the end of last year. The real estate market is expected to recover in the second half of the year. — VNS Photo Bồ Xuân Hiệp

But the property sector has admittedly been facing challenges such as debt repayment pressures, fraud and other financial scandals.

Numerous bond issuers, mostly real estate developers, have missed interest and principle payment deadlines since the end of 2022 following the arrest of Trương Mỹ Lan, chairwoman of Vạn Thịnh Phát, for financial fraud.

This has shaken market confidence.

Despite multiple challenges facing the city, its Gross Regional Domestic Product (GRDP) grew by 6.46 per cent in the first half of the year.

The country’s largest city aims to achieve a yearly growth rate of 7.5-8 per cent. — VNS