Overcoming hardships in 2021

According to the Ministry of Construction, new supplies on the Vietnamese real estate market fell by half in the first 11 months of 2021, while successful transactions slumped 20% from a year earlier.

Prices of residential land in some localities advanced in the late first quarter and early second quarter, for example in Quoc Oai (up 20%), Ba Vi (45%), Bac Ninh (20%) and Hung Yen (26%). Thanh Hoa, Thu Duc City and other places also witnessed land price hikes in a short time. Seeing this phenomenon, the Government, the Ministry of Construction, and the Ministry of Natural Resources and Environment directed local authorities to deliver timely warning notices and publicize information on land-use planning and land prices to quickly cool down land price increases.

Despite being directly affected by the pandemic, vacation property was dull in the gloomy picture in 2021. According to experts, this segment improved after the prolonged social distancing period and resumed reception of international tourists from November. Industrial real estate stood firm during the pandemic. Even in the fourth quarter, rental prices of industrial real estate looked up.

Notably, some new policies touched the real estate market, such as the Prime Minister’s Decision 27/2021/QD-TTg on reducing land rents in 2021, and the Ministry of Construction’s Circular 09/2021/TT-BXD on implementation of criteria for investor selection in social housing construction investment projects in order to promptly support businesses and investors.

Expectations on early market recovery

Neil MacGregor, Managing Director of Savills Vietnam, said that Vietnam has been an attractive destination for real estate investors in the world. Not only industrial real estate but also residential real estate, holiday real estate and health real estate are magnets for foreign investors.

According to data from the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI), as of December 20, 2021, the real estate sector drew a total of US$2.6 billion from foreign investors, becoming the third-largest recipient of FDI funds, accounting for nearly 9%. Typically, Ascott Group Ltd (Capitaland) acquired the 364-apartment Somerset Metropolitan West Hanoi for US$93 million. Aortronic Joint Stock Company, a real estate developer, bought Phu My Industrial Park (Ba Ria-Vung Tau) for about US$30 million. These are the clearest proofs of investment appeal in Vietnam.

Mr. Nguyen Van Khoi, Standing Vice Chairman of the Vietnam Real Estate Association, said that Vietnam's real estate market reportedly has much room for development and is expected to recover soon as demand in many segments is still high. When the Government's support policies are in place, Vietnam's real estate market will surely accelerate and boom.

From a business perspective, Mr. Nguyen Quoc Hiep, President of GP Invest, said that real estate is typically governed by more complicated legal procedures than other sectors as it is regulated by 12 different laws, such as the Law on Land, the Law on Housing and the Law on Real Estate Business. Therefore, in order for Vietnam's real estate market to attract more and more international investors, it is important to have an enabling legal corridor. 

According to Mr. Can Van Luc, an economist, the real estate market in 2022 will be like a "bull" in the stock market, which symbolizes an advance and growth. However, it still depends a lot on policies, economic resilience and business capacity.

When the new normal status is in place and the epidemic is controlled, the property market is likely to revive strongly in 2022.