Luxury real estate developments in Thủ Thiêm new urban area in Thủ Đức City in HCM City. Experts recommended businesses focus on more affordable housing development to keep up with the increasing demand from home buyers. — VNS Photo Bồ Xuân Hiệp

The real estate market in HCM City, which accounts for 15 per cent of the city’s economy, showed signs of recovery in the first quarter of the year.

Revenue of the real estate sector reached over VNĐ61 trillion in the first quarter, up 15.7 per cent year-on-year, according to a report by the HCM City Statistics Office.

In the first quarter of 2023, the revenue of the sector had decreased by over 10 per cent, it said.

The real estate business contributes nearly 23 per cent of the total retail sales of goods and services, and accounts for about 15 per cent of the city’s GRDP.

The real estate sector has encountered challenges in recent years but has shown signs of improvement in the first quarter of the year, with demand continuing to rise in the industrial and office rental segments.

In addition, foreign investments in real estate have started flowing into the city, positively impacting the industry’s stock prices.

According to a report by the HCM City Real Estate Association (HoREA), as of the beginning of this year, about 30 per cent of the more than 148 projects facing legal issues in the city have been resolved thanks to the efforts of authorised agencies at the central and city levels.

The market in the city is expected to recover in the second half of the year due to factors such as foreign direct investment inflows, consumer demand, and infrastructure development.

Another factor is the multiple policies implemented by the city government related to legal matters and interest rates, which have increased liquidity and project implementation progress.

The market is predicted to fully recover from 2025 onwards, driven by the Government’s policies and support from real estate enterprises.

Challenges persist

However, experts have also pointed out that the housing market continues to face limited supply.

Only one housing project was approved for investment in the city in the first quarter. There have been no new projects launched for sale since the beginning of the year, according to a recent report by the Department of Construction.

Other hurdles facing the market include the scarcity of land, high prices, and problems related to legal issues in licensing projects, which particularly affect the townhouse market.

Lê Hoàng Châu, chairman of HoREA, recommended real estate firms should 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.

The Southeast Asian nation 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.

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.

The Government has formed a task force involving various ministries and agencies to address all the issues related to the markets. — VNS