These policies will strongly change the real estate market in Vietnam 2021

Minh Hoàng
April 12, 2021

According to Dr. Can Van Luc, Chief Economist of BIDV, a member of the National Financial and Monetary Policy Advisory Council, in 2021, the world economy in general and Vietnam in particular will have a strong recovery. Vietnam real estate also followed that momentum with a positive prosperity, especially in the context that in 2021 there will be many policies that have a positive impact on the real estate market.

The bright spot of Vietnam’s economy

– Although the Covid-19 pandemic has not been completely controlled worldwide, Dr. Can Van Luc is quite optimistic about the world economic scenario of 2021. He said that in 2020, the world economy has a deep recession, down 3.5-4% compared to 2019. But the world economy will recover strongly in 2021. Organizations such as IMF, WB have given impressive numbers when forecasting positive growth of the background. the world economy is 4-5.5%.

– Accordingly, Mr. Luc said that Vietnam’s economy is also on the rise. In the first two months of 2021, Vietnam’s economy appeared many bright spots such as: epidemic outbreaks continued, but basically continued to be controlled; Retail activity recovered and increased significantly; industrial production continued to recover; Export – import increased sharply in 2 months, trade balance remained surplus; inflation increased again, but under control; Public investment disbursement and FDI prospered from the beginning of the year; interest rate level decreased slightly, the basic exchange rate was stable; the stock market is quite up and the real estate market is recovering.

– Although he believes in an optimistic scenario, Mr. Luc still gives warnings about risks and challenges from the outside. First, the world Covid-19 epidemic is still unpredictable, the production and distribution of vaccines are still slow to the developing countries. Second, trade and technology tensions are escalating and unpredictable. Third, world geopolitics complex and natural disasters and floods will still increase next year. Fourth is the risk issues, global financial instability.

hình ảnh thị trường bất động sản
The economy in general and the real estate market of Vietnam in particular are forecasted to have a good fortune in 2021

– Besides, there are risks and challenges in the country such as increasing budget deficit, public debt and debt repayment obligation; The enterprise sector (especially small and medium enterprises) was strongly influenced by the Covid-19 translation, while the implementation of the support package was still slow; NPLs increased and operational risks increased, but basically under control, restructuring the economy was slow and taking advantage of free trade agreements was not good.

Policies affecting the real estate market

– According to Mr. Luc, the real estate market is an important element of the economy. Real estate plays a role as a bridge connecting industries and markets in the real estate value chain with 35 industries and fields related to the real estate market. In which, there are 4 major industries related to real estate, making a big contribution to the country’s GDP: construction (6.19% of GDP), tourism (9.2% of GDP), accommodation (3.14%). GDP), finance – banking (5.37% GDP). The real estate industry alone contributes 4.42% of GDP. This field also plays an important role in attracting investment capital when ranked second in attracting foreign capital, accounting for about 10% of newly registered FDI annually.

– According to Mr. Luc, in 2021, many policies related to construction and real estate business will affect the market. Specifically, the revised construction law; revised investment law; Decree 148/2020 / ND-CP amending; supplement a number of decrees detailing the implementation of the Land Law; Resolution 164 (11/2020); Resolutions construction plan for low-price housing development; Decree 15 (3/3/2021) detailing a number of contents on the management of construction investment projects.

– Mr. Luc emphasized that laws, orientations and policies are being revised in the direction of perfecting and reducing processes and procedures to support the development of the real estate market. These changes also contribute to reducing time, cost and product costs, and disassembly for real estate projects. In particular, this change also focuses on cheap products to balance market supply – demand and appropriate product structure, and minimize price speculation.

– In addition, there must be changes in financial, credit and tax policies to control liquidity risks such as gradually reducing the proportion of short-term capital for medium and long-term loans (Circular 22 / NHNN); Risk control of corporate bond issuance: Decree 153/2020 / ND-CP; Adjust the land price bracket asymptotic to the market price: Decree 96/2019 / ND-CP; Decrees and circulars on support packages in the context of Covid-19 translation; Amended Securities Law, allowing the establishment of Real Estate Investment Trust Fund (REIT); Decision 316 of TTg (March 9, 2021) on the pilot Mobile Money service.

– These policies will help reduce financial costs, increase operational efficiency and develop safely and sustainably as well as facilitate capital flows into the market under controlled conditions, Mr. Luc said. risk. Policies also affect house prices, compensation for site clearance closer to market prices, partly supporting businesses to reduce costs and overcome difficulties caused by the Covid-19 epidemic. In addition, the establishment of a Real Estate Investment Trust (REIT) plays an important role as an important capital mobilization channel and the piloting of Mobile Money service will promote non-cash payments.