Challenges such as the lack of consensus among owners on fixing and rebuilding old apartment buildings, a severe shortage of social housing, unattractive low-cost housing segments for investors, inefficient land resource uses, and an unstable real estate market plagued by speculative waves have persisted for years.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, said the three new laws on housing, land, and real estate business, set to take effect in August, are expected to address longstanding bottlenecks with numerous amendments and supplements, providing a clearer and more transparent legal framework.

“One solution to the housing shortage involves addressing old apartments. According to the Ministry of Construction, over 2,500 old apartments nationwide require repair or reconstruction, with two-thirds located in Hanoi. However, the actual number of rebuilt apartments remains very low due to various challenges,” Dinh said. “The Law on Housing is anticipated to expedite this process through addressing 11 key issues related to old apartments, including inspection, compensation, resettlement plans, compensation coefficients, and achieving consensus.”

The new regulations are expected to boost the supply of both commercial and social housing

Notably, the law proposes consolidating old apartment buildings to enhance the feasibility of resettlement for owners.

According to the Hanoi Department of Construction, there are currently almost 1,600 old apartment buildings in the city, divided into 76 zones, and over 300 independent houses. The plan includes grouping these buildings, increasing the number of floors, and enhancing green and technical areas to accommodate resettlement on-site.

Currently, some old apartment buildings that do not meet standards cannot be rebuilt at their original locations and must be relocated.

Nguyen Quoc Hiep, chairman of Global Petroleum Investment JSC, said, “This solution involves renovating individual apartment buildings on small land areas with limited height, where resettlement is not feasible. Consolidation, implemented across various wards and districts, aims to synchronise planning and comprehensively renovate old apartments.”

Bui Tien Thanh, head of the Urban Development Division at the Hanoi Department of Construction, said that if planning is carried out synchronously, it will draw in numerous investors and developers due to improved and detailed planning possibilities.

“Specifically, new regulations on land prices will ensure more frequent updates closer to market rates, leading to higher land prices and project costs. Additionally, the auction and bidding mechanisms will foster competition, further driving up land prices,” Thanh said.

Investors will need to enhance their capacity, with advantages going to those with substantial clean land holdings and strong financial resources.

Previously, deposit requirements were governed by agreements between investors and buyers, with developers often requesting large deposits, sometimes up to 90 per cent of the property value. The new laws introduce a specific deposit cap of 5 per cent, potentially impacting developers by removing an easy capital mobilisation channel.

As a result, real estate prices are expected to rise. The new policies will increase project implementation costs for developers, said a report by securities company ABS. “For consumers, the new regulations are expected to boost the supply of both commercial and social housing, offering more options to meet varying needs and incomes,” ABS added.

Forecasts suggest that Hanoi will see the highest number of apartments for sale in the next five years, with about 9,000 units, while Ho Chi Minh City will offer approximately 4,000 new apartments. The new laws are anticipated to boost housing supply.

The early implementation of the Land Law and related regulations is expected to resolve legal issues for 1,200 projects nationwide, including around 150 in Ho Chi Minh City.

The Ho Chi Minh City Real Estate Association reports that legal issues account for 70 per cent of real estate businesses’ difficulties. In the first quarter of the year, only one commercial housing project received investment approval, and no new affordable apartment projects were initiated.

Vo Hong Thang, investment director of DKRA Group, commented that in the long term, the market will increasingly prosper and this positive movement will spread to the entire economy.

“However, in the short term, specifically the last six months of the year, the three new laws will not have too much impact on real estate segments, especially with the numerous uncertainties of the world economy. These laws need 6-12 months to really penetrate the market,” he said.

Since the end of 2023, the market has had some signs of recovery but only focused on the affordable segment, especially class B and C apartments in big cities.

“However, the number of increase is not much, equivalent to 15-20 per cent of the raise in 2019,” Thang added. “The total number of deposits in banks is still high, despite very low interest rates. A defensive mentality has caused the liquidity of the real estate market to raise by very little.”