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About foreign direct investment capital mobilized from home buyers. However, at
for the real estate sector
present, the capital structure for the real estate market
FDI is a reliable source of capital for real estate is still unreasonable: mainly from bank credit sources,
businesses, helping to promote sustainable growth capital mobilized through bond issuance and customer
of the market in the long term. Viet Nam now has advances meanwhile investor’s capital only accounts for
many advantages to attract FDI into the real estate about 15-30% of the total investment of the project. There
sector. The signing and participation of free trade are no stable medium and long-term capital sources for
agreements is expected to open up the service and the real estate market.
investment sectors, whereby foreign companies will - Impact from corporate bond issuance: In addition to
establish or set up branches in Viet Nam, increasing the capital from credit institutions and capital mobilized
demand for factories, industrial parks, international from buyers, for the remaining capital needs, real estate
standard offices. project developers currently mainly rely on corporate
The new regulations in the Law on Real Estate bond issuance. This is the suitable source of capital for
Business, the Law on Housing (amended), especially real estate. Meanwhile, the issuance of corporate bonds
in allowing the transfer of a part or the whole project, in the past time still has many shortcomings, leading
is also an advantage to help attract FDI into Viet Nam's to liquidity risks of the corporate bond market as well
real estate. According to data reported by the Ministry of as the ability to continue to raise capital of real estate
Planning and Investment, FDI in real estate in 2022 has enterprises through this channel. This affects the liquidity
increased by USD 1.85 billion, an increase of more than of the corporate bond market and the ability to develop
70% compared to the whole year of 2021 and holds the 2nd and complete real estate projects. According to the Viet
position in the list of FDI sectors attracting FDI in 2022. Nam Real Estate Association, in 2023 there will be a large
About the operation of real estate businesses amount of corporate bonds coming due in the context of
the quiet real estate market.
In 2022, the activities of real estate businesses face - High housing prices affecting purchasing power: In
many difficulties due to: in accessing capital sources relation to other countries in the region, housing prices
(credit, bonds...); interest rates, foreign exchange rates, in Viet Nam are currently high compared to the income
price increase of input materials; unsale of products... This of the majority of people, not suitable for the majority
situation causes many enterprises to narrow their scale of final buyers to live in. The selection of segments for
of investment, production and business; to streamline investment is not reasonable, leading to an oversupply
the apparatus, to reduce labor force; to stop or suspend in the high-end segments but a shortage in the affordable
investment and construction activities of a number of segment. There is still a phenomenon of speculation and
projects; to stop implementing new projects... surfing in real estate..., affecting the stability of the real
The difficulty of the real estate market has led to estate market in general and lending activities to the
difficulties for contractors, material suppliers and many real estate sector in particular. Studies also show that, in
other industries that affect social security. Notably, terms of prices, currently, Viet Nam's real estate prices are
as of December 25 , 2022, the outstanding balance of relatively high compared to the incomes of the majority of
th
individual corporate bonds is about VND 2,000 trillion, of people. The average Vietnamese needs at least 23.5 years
which the real estate business is over VND 400,000 billion of income to buy a house, ranking 14 out of 107 countries
(accounting for over 30%). (the higher, the more expensive) in the world, equivalent
to Thailand, South Korea (while the our income is lower
Limitations and obstacles than theirs); much higher than Indonesia (18.5 years),
to the development of the real estate market Singapore (15.5 years), India (9.2 years) and Malaysia

(8.1 years)....
- The legal environment still has many bottlenecks: - The market structure is seriously unbalanced, the supply-
Currently, many legal regulations related to the real estate demand relationship is out of phase: According to Savills Ha
market are overlapping, inconsistent, unclear, not suitable Noi (2023), the secondary market did not grow much,
with reality... There is a fear of wrongdoing, a pushing of while the primary selling price increased strongly. Since
responsibility of civil servants that makes many projects 2018, the average primary price has increased by 11% per
impossible to implement, or waste time to implementat. year, while the secondary price has increased by only 5%
This makes the businesses unable to sell, transfer, or per year. Because of the different price growth rates, the
mortgage...; causing to abandonment, inventory, waste, two markets have a large price difference. For example, in
cost in many real estate projects. Ha Noi market, supply imbalance is still quite common.
- The capital structure for the real estate market is still If in the past, Grade C apartments accounted for 40-50%,
unreasonable: Capital for real estate is mobilized from competing directly with the volume of goods from Grade
many different channels, such as FDI capital, corporate B apartments, so far the Grade C apartment segment only
bonds, stock market, capital and assets of enterprises, accounts for a very small proportion, even less than 10%.

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