Development Orientation of Vietnam's Real Estate Market

The countries and territories investing in Vietnam are Taiwan, Singapore, Japan, South Korea and Hong Kong, accounting for 60.6% of the total registered capital. In 2006, there were 44 countries and territories investing in Vietnam. Of which, South Korea took the lead with an investment capital of over 2.5 billion USD, accounting for 25.2% of the total newly registered capital. Next was Hong Kong with an investment capital of 1.59 billion USD, accounting for 15.6%. Japan ranked 3rd with an investment capital of 1.33 billion USD, accounting for 13.1%; the US ranked 4th with an investment capital of 790.6 million USD, accounting for 7.7% of the total newly registered capital. If including some US projects through third countries, the US ranked 2nd. However, in the long term, there will be many partners from Europe and the US investing in Vietnam because Vietnam opened its service market when joining the WTO. However, it should be noted that many foreign companies have invested in Vietnam through third countries to enjoy preferential treatment in terms of costs, procedures and taxes in these countries. Therefore, the nationality of foreign investors in the investment certificate may not be the same as their real nationality.

 Investment funds play a role in promoting investment in real estate.

There will be many investment projects to develop commercial real estate through real estate investment funds. The role of investment funds will become increasingly important in real estate business because of their ability to mobilize capital and use capital effectively, investors can trust to entrust their capital to these funds for management. Currently, there are many investors with capital but do not have the conditions to research the market or do not operate in the real estate sector, so they can use investment funds to do real estate business in Vietnam when they realize that this is a market with many prospects and the ability to gain profits. On the other hand, investment funds have the ability to mobilize many small sources of capital to develop large projects.

Maybe you are interested!

 The expansion of real estate companies today:

There will be many current real estate businessmen expanding their business by searching and implementing new projects. There have been many successful investors in the real estate business in Vietnam and they will not miss the current opportunity to continue developing their business with the available advantages of market research, established reputation, potential customers, construction and management experience, etc.

3.2. Orientation of development of Vietnam's real estate market

On May 6, 2004, the Government issued Resolution No. 6/2004/NQ-CP on real estate market development with the following main contents:

3.2.1. Real estate market development goals

Effectively exploiting all types of real estate, especially residential real estate, maximizing resources from land, houses and construction works to develop the economy - society, serving the cause of industrialization and modernization of the country. Attracting social resources, encouraging economic sectors to participate in investing in real estate development, especially investing in the construction of production - business facilities, technical infrastructure works, social infrastructure, contributing to the synchronous formation of markets, creating favorable conditions for participating in international economic integration.

3.2.2. Solutions for real estate market development

3.2.2.1. General solutions include

Focus on building and perfecting the legal system, appropriate mechanisms and policies to ensure consistency, unity and effectiveness to create conditions for the real estate market to operate in accordance with the provisions of law; research and adjust and supplement a number of real estate taxes and fees in the direction of encouraging

Effectively use real estate, at the same time develop official transactions in the market; perfect credit policies to serve the development requirements of the real estate market; study and perfect mortgage mechanisms and policies, loan guarantees to develop the real estate market; enhance the ability to supply real estate goods, especially land for production - business and residential real estate to contribute to stabilizing the market according to the law of supply - demand; gradually perfect the market structure and make transactions in the real estate market healthy.

3.2.2.2. Specific solutions

Speed up the issuance of certificates of house ownership and land use rights in accordance with the law to create conditions for entities to conduct legal and public transactions in the market; focus on directing the establishment of detailed urban construction planning at a scale of 1/500 and rural residential planning to strictly manage real estate investment and construction activities; strictly manage land use, implement land use rights auctions to effectively exploit land resources; perfect the compensation and land recovery mechanism to serve the implementation of real estate projects.

In the orientation of the Vietnamese State in developing the real estate market, attracting FDI into the market is one of the important contents. According to the Party's viewpoint, developing the real estate market must " gradually make the real estate market competitive compared to the regional market, attractive to investors ". Vietnam's viewpoint is to attract FDI into real estate projects requiring large capital, projects associated with infrastructure and encourage investment in difficult areas and locations as well as real estate projects for low-income people. The reason why Vietnam encourages investors to invest in these projects is because these are projects requiring large capital, time

capital recovery is quite slow. With these projects, domestic investors are often not very enthusiastic or do not have enough financial capacity and technical capacity to implement the project. In addition, the policy of attracting FDI into the real estate market of Vietnam also encourages foreign investors to invest in the form of joint ventures, in which Vietnamese enterprises often contribute capital in the form of land use rights. The form of 100% FDI investment is allowed in Vietnam from the beginning but is less encouraged by the state than the form of joint venture because this form requires foreign investors to have a deep understanding of the legal environment as well as factors related to their real estate projects. With the characteristics of a rather complicated field with unclear legal regulations, investment in the form of 100% FDI can be an obstacle for many new investors entering the Vietnamese market.

3.3. Solutions to increase foreign direct investment in Vietnam's real estate market

3.3.1. Perfecting the real estate investment environment for the land sector

To increase the attraction of foreign direct investment in the real estate market, one of the important factors is that the real estate market must develop healthily and transparently. Here are some proposed solutions.

 In principle, it is necessary to build and develop a healthy and competitive real estate market in accordance with the provisions of law. Participants in the real estate market must be trained to have a certain understanding of the operation of the market in general and the real estate market in particular. On the other hand, participants in the real estate market must have real financial capacity, creating a legal environment.

favorable conditions to promote foreign investment opportunities to thereby increase the country's economic growth.

 Regarding land use planning, it must be comprehensively studied, including many socio-economic factors, in which land use planning maximizes the economic value of each real estate unit. The land use planning process needs wider participation from the community, managers and economists, and must integrate development factors in the relationship between economic sectors, minimizing overlap and waste in planning. Urban, rural, agricultural, industrial and service planning need to be closely related to each other, and should not be carried out separately. Planning must be feasible. Create a clear coordination mechanism between types of planning. The planning results of one sector must be informed to other sectors to avoid overlap and obstacles in the implementation process. Land use planning and plans need to have harmonious adjustments between different needs in using the same land area, harmoniously resolving land use needs.

 Regarding investigation, registration and issuance of certificates of land use rights and assets attached to land, it is necessary to create a reasonable mechanism to conduct a comprehensive investigation and assessment of land potential, especially in key economic zones and urban areas to increase real estate value. At the same time, it is also necessary to issue certificates of land use rights and assets attached to land to create a legal basis for real estate transactions, gradually making the market transparent.

 Building a healthy financial market both resolves financial relations in relation to land and creates a logical relationship in facilitating the development of the real estate market.

 Establish a regular information system on the real estate market to allow for smooth operations and reduce transaction costs. The information system supporting the real estate market must be strong enough to provide accurate and complete real estate services to market participants while creating a basis for State management. Regularly update and monitor fluctuations in the real estate market to facilitate accurate and effective transactions. Establish and further expand the operations of real estate centers, real estate supermarkets, trading floors, and brokerage centers to diversify real estate market activities.

 Real estate consulting activities in general and land price consulting in particular aim to create conditions for the real estate market to develop healthily and attract investment. With the development of the economy, the demand for land valuation will increase, thereby showing a great prospect in the future for the land valuation industry.

 Training experts for the real estate market including: professional skills in buying, selling, real estate consulting, valuation, brokerage, notary, insurance, etc. This is a field that in practice has not received the attention it deserves.

3.3.2. Perfecting the real estate investment environment for the construction sector

Vietnam's investment and construction laws have undergone fundamental changes since 1990 and are being gradually improved. Basically, the system of legal documents on construction has been built relatively synchronously and completely and has made practical contributions to promoting the real estate investment sector in Vietnam.

However, in the coming time, it is necessary to continue to monitor, grasp and collect recommendations from localities and bases to gradually supplement and perfect current legal documents.

3.3.3. Perfecting the real estate investment environment for the credit sector

The participation of financial, credit and banking institutions in real estate transactions and markets is extremely important. Up to now, only banks have partly played their role and have regulations related to real estate business loans, while regulations on other intermediary organizations such as valuation organizations, insurance, real estate development investment funds, real estate consulting and brokerage companies are not available or limited, so these organizations have not played a role in the real estate market.

To create a legal framework for this activity and promote the development of the real estate market, it is necessary to issue legal documents related to the establishment of organizations and State valuation enterprises specializing in determining land prices for tax purposes, and independent valuation companies providing price advice to subjects participating in real estate transactions. The State must also have specific regulations on the practice of real estate valuation, consulting and brokerage services; requiring these enterprises to register their business and pay taxes like other legal entities.

The real estate market will grow and become more vibrant with many forms of investment and many investment participants. Therefore, it is necessary to diversify the types of investment in this market. In addition to direct investment, there should be indirect investment through real estate investment funds (REIT - Real estate investment Trust). REIT is an institution that allows investors (both domestic and foreign) with idle money to invest in the real estate sector based on the capabilities, expertise and reputation of professional investment management companies. REIT allows small investors to access large projects that they cannot do on their own but are a place to gather capital.

into large projects. This is a form of risk dispersion that is still effective if fund management companies operate professionally and have a complete legal corridor to regulate the operation of this model.

3.3.4. Perfecting the real estate investment environment for the financial sector

The financial banking system is the most important and key point in economic activities in general and the real estate market in particular. The real estate market is closely related to the capital market because the real estate market has great value, all real estate investment transactions require huge investment capital. Therefore, if a stable and healthy capital market cannot be built, it will be difficult to develop the real estate market. Some solutions for the banking industry are as follows.

 Continue to innovate and improve credit policies;

The banking system continues to implement monetary policy according to market principles, ensuring macroeconomic stability, building an equal credit operating environment for all economic sectors, open, with a synchronous, transparent legal framework, gradually conforming to international practices and standards.

- Coordinate with ministries and branches to implement solutions to develop the financial and monetary market to create conditions for credit institutions to expand their ability to mobilize long-term capital for lending to economic sectors and real estate businesses, in sync with the development level of the real estate market.

- Expand cooperation with international financial organizations (WB, ADB, ...) to attract foreign capital to finance housing business and other real estate investments.

Comment