documents, other forms of description. Because of this feature, real estate management can be done more easily even if there are many changes in owners. The law stipulates that real estate transactions are through documents, certificates of right to use and must be registered with the competent authority for the purpose of strictly managing real estate and protecting the rights of owners. The fixed nature also makes real estate goods with different locations have different values. This fixed nature has raised the issue of having to regulate the real estate market differently from the normal commodity markets, through forecasting and proactive planning by local authorities to regulate supply and demand.
- Individuality and scarcity: This characteristic of real estate comes from the individuality and scarcity of land. The scarcity of land is due to the limited surface area of the earth. The specific scarcity of land is the limitation of land area of each piece of land, area, region, locality, territory... Because of the scarcity, fixedness and immovability of land, real estate goods are individual. In the same small area, even two adjacent properties have different factors. In the real estate market, it is difficult for two completely identical properties to exist because they have different spatial locations, even two adjacent projects built according to the same design.
- Mutual influence: Real estate is greatly influenced by each other, the value of one real estate can be affected by another. Especially, in the case of the State investing in the construction of infrastructure works, it will increase the beauty and enhance the value of real estate in that area. In fact, the construction of one real estate enhances the beauty and attractiveness of another real estate is a quite common phenomenon.
- Has a long life cycle: When the physical life cycle ends, the main load-bearing structures of the construction work will age and be damaged, and cannot continue to be safe for use. In that case, renovation and upgrading can be carried out.
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Basics of Real Estate Investment
Real estate grants gain greater benefits than demolition and new construction to extend the physical life cycle, and also extend the economic life cycle by continuing to exploit or change the purpose of use. Because land is a natural asset, a type of resource that is considered indestructible, except for natural disasters, erosion, burial, architectural objects and constructions on land after construction or after a period of use are renovated and upgraded can last for hundreds of years or longer. and can be used for many different purposes, so real estate goods are very rich and diverse, never exhausted. [5]
- Real estate value: Real estate is often considered a valuable asset and can increase in value (through investment, business, etc.). Therefore, real estate becomes an object for investment, preserving the value of accumulated money and also an object attracting speculation. The value of land real estate has very different characteristics compared to other real estate. The value of land real estate depends on the purpose of using them, or in other words, depends on the impact of human factors that increase the profitability of real estate.
1.4. Conditions for real estate to become a commodity
According to the definition of classical economics, for wealth in general to become a commodity, society must have a certain degree of division of labor, and at the same time there must be a relative separation between the subjects of production. For special goods, there must be special conditions.
Real estate will become a commodity and a special commodity if it meets the following conditions:
- Real estate must be a product of labor that people put effort into exploring and preserving.
- Real estate must have a specific owner, must be permitted by law and must meet all conditions for transaction. Specifically, such as having confirmation of ownership (with certificate), not being in a prohibited area, not being in a planned area that must be relocated or have its purpose of use changed according to the State's plan and not causing environmental pollution... [ 3]
2. Real estate market
2.1. Concept of real estate market
Market is a concept that is often mentioned in business. One of the most general concepts of the market is: "The market is a set of agreements through which sellers and buyers come into contact with each other to exchange goods and services" [1]. Currently, there is no standard concept given for the real estate market. However, due to the specific characteristics of real estate goods, from the general concept, there can be the following understandings of the real estate market:
- The real estate market is the market for buying, selling, exchanging, leasing, mortgaging, and transferring the right to use real estate according to market rules and State management.
- The real estate market is the sum of real estate transactions in a certain location, within a certain period of time.
- The real estate market is the organization of rights related to real estate so that they can be exchanged for value between individuals or market participants. These rights are independent of the physical properties of real estate. This concept leans towards the real estate market as a model, an organization for rights related to land to be exercised independently.
However, the above understandings all have a general common point about the real estate market, which is the sum of real estate transaction relationships carried out.
through monetary commodity relations. More specifically, it is the sum of real estate commodity exchange relations (transaction relations between buyers and sellers, between supply and demand of real estate) and the implementation of real estate value transfer relations. In fact, the basic content of the real estate market and also the current popular concept of the real estate market is the real estate market because in the real estate market, the real estate market is most clearly formed and operates most actively. The real estate market is understood as the place where the buying and selling of land use rights, construction works and services associated with those goods take place. The process of exchanging land use rights is always moving and developing, making the methods of transaction and exchange also take place in many different forms.
There are two forms of business in the real estate market. They are real estate business and real estate service business:
- Real estate business: According to the definition of the Law on Real Estate Business of Vietnam: "Real estate business is the investment of capital to create, buy, receive transfers, rent, hire-purchase real estate for sale, transfer, lease, sublease, hire-purchase for the purpose of profit." [7] The subjects performing this activity are real estate development investors, real estate development funds, real estate speculators, partners contributing capital to the project in the forms of money, land, technology, etc.
- Real estate service business: “Real estate service business is an activity supporting real estate business and the real estate market, including real estate brokerage services, real estate valuation, real estate trading floors, real estate consulting, real estate auctions, real estate advertising, real estate management”. [7] Participating in this activity are investment consulting companies, real estate brokerage companies, real estate management companies, marketing agents, auditing companies, auction companies, securities companies, etc.
Although they are separate concepts, real estate business and real estate service business are always closely linked and have mutual impacts and influences on real estate development. Real estate business cannot be successful without the existence of real estate service business and vice versa. Therefore, the complete real estate market cannot only be the relationship between buyers and sellers of real estate but also the place where real estate-related transactions take place such as leasing, mortgage, insurance or transfer of real estate use rights, etc. and transactions in the real estate market are also affected by the law of value, the law of supply and demand, the law of competition, etc. as in other commodity markets.
Factors that make up the real estate market
From a commercial economic perspective, the real estate market is viewed on the basis of the totality of factors that make up this market, including:
- Real estate goods: land, constructions on land...
- Forces participating in the real estate market: buyers, sellers, investors, managers, intermediaries, tenants and landlords...
- Infrastructure of the real estate market: where exchange activities take place, means of supporting exchange, buying, selling, trading, means of information, legal basis...
- Market operating mechanism: State management and regulation of market rules.
2.2. Characteristics of the real estate market
Real estate is also a commodity, so the real estate market also has the same characteristics as other commodity markets.
- The real estate market is also affected by market rules like other commodity markets such as the law of value, the law of supply and demand, the law of competition... and is affected by factors of supply and demand for real estate, the number of real estate transactions, prices, competition, policies of the State and local authorities...
- The right to own and use real estate is protected by law. At the same time, real estate transactions and business always require transparency and publicity.
after:
However, the real estate market also has its own characteristics such as
- Special transfer method: Because real estate is not a commodity
In normal conditions, ownership and use rights of real estate are separated, so when buying, selling, or transferring real estate, there must be a mechanism for ownership to be realized economically. Buying, selling, or transferring real estate is always accompanied by a contract or deed.
- Special transfer costs: Real estate transactions always involve real estate transaction costs such as registration tax, management fees, value added tax, transfer tax, notary fees, lawyer fees, brokerage commissions, information, etc. According to practice, the total reasonable real estate transaction fee accounts for about 6% to 8% of the real estate purchase and transfer price. The valuation of the framework for synthesizing transaction costs, services and taxes is carried out by state agencies. Land use tax is an annual tax paid based on the profits earned on the land. In general, land use tax does not have much impact on the real estate market, but in real estate valuation, land use tax is also considered a factor that helps to value real estate more accurately.
- The real estate market is closely related to the real estate credit market. Because if we want the real estate market to form and develop, there must be a real estate credit mechanism such as credit for buyers, mortgage credit, long-term investment loans, etc. In countries with more developed real estate markets, the amount of real estate credit is higher and there is a tendency to form professional banks for real estate credit in the economy.
II. Real estate market management and real estate management
In the real estate sector, management is the process of implementing and coordinating the functions of planning, organizing, leading and controlling activities in the real estate market in the impact of the management system on the managed system to achieve goals through the use of management tools and policies. Management activities can be divided into two levels:
1. Real estate market management
The role of real estate market management is the responsibility of the State. State management of the real estate market is a process of implementing and coordinating four functions: planning, organizing, leading and controlling transactions in the real estate market to promote the positive development of this market. For the real estate market, State management has the following roles:
- Orientation: The State orients and guides enterprises in investment and business activities in the real estate market to exploit all potential for market development through strategies, planning, target programs, plans, policies and legal regulations.
- Creating a business environment: The State creates and improves the business environment for enterprises through opening up commercial relations in the real estate market and promulgating a synchronous legal system.
such as issuing the Investment Law, Real Estate Business Law, Tax Law... The State also uses its foreign relations to attract investment and mobilize capital for the development of the real estate market.
- Support businesses operating in the real estate sector: In the process of economic and commercial management, the State always uses its power and capacity to support businesses through policies on construction, credit, interest rates, exchange rates, investment funds, etc. and legal consulting companies for businesses. In addition, the State also pays attention to developing other areas to support real estate market activities such as information, trade promotion, etc.
- Resolving conflicts in the market: The State is the support for enterprises in resolving conflicts arising in transactions in the market such as conflicts between business entities, conflicts in implementing tax regulations, legal administrative procedures... through its legal system, regulations, standards and organizational apparatus to improve economic and social relations in the real estate sector and create momentum for economic development. The market and enterprises cannot resolve these conflicts on their own.
- Regulating the real estate market: The market regulates supply and demand and prices in both positive and negative directions. However, the State plays a leading role in recognizing and proactively using instrumental measures to intervene in the market to promote its positive aspects and limit its negative aspects. The State does not directly participate in real estate business operations but only creates a favorable environment to help business entities promote comparative advantages, exploit internal resources and improve operational efficiency.
2. Real estate management