Challenges of Vietnam real estate market

However, Vietnam is an interesting exception as the market still has positive factors in some segments. By the end of the third quarter, the real estate sector still attracted nearly 2 billion USD of foreign capital.

Mr. Paul Tostevin - Global Research Director of Savills - shared the challenges of the Vietnamese real estate market and solutions to increase the supply of affordable housing.

In fact, cross-border investment activities have decreased significantly in recent times. When the economy is difficult, businesses often prioritize investment in major markets. But Mr. Paul believes that there are still opportunities when the global financial and fiscal situation is more transparent. Global GDP growth is expected to decrease in the coming time.

The Vietnamese real estate market is facing a paradox of having a large number of unsuitable products. The market has too many class A and class B products while class C products with prices suitable for the majority of people are scarce.

In recent times, foreign real estate developers have focused on developing more premium products to suit their brands when investing in Vietnam. This is also the case in many cities around the world. However, Vietnam still has advantages with a large young population and strong prospects for income growth.

The lack of affordable housing is not a problem unique to Vietnam, but a problem that plagues many countries. However, many markets have come up with some impressive solutions that we can learn from.

Singapore, for example, has invested heavily in affordable housing. Today, 90% of the population lives in government-owned and managed HDB flats, which are offered with special incentives for first-time homebuyers. This ensures that citizens can afford to buy a home.

Similarly, in the UK, housing is a huge challenge but the government has developed different types of affordable housing, including social housing. To attract investment in this segment, governments have launched major support policies such as tax breaks, investment incentives, low interest rates for home buyers, etc.

In fact, Vietnam has a fairly good policy foundation for social housing. The difficulty is only in the implementation and development of projects. Previously, investors could achieve higher profits in other segments, so they did not want to invest capital in social housing with low profits.

However, real estate developers still have great opportunities in the C-class housing segment or worker housing in large industrial zones. If the Government continues to promote incentive policies as it is now, the problem of affordable housing or housing for low-income people will be improved in the near future.