The property market closed 2014 with promising signs that it will thrive in 2015. Viet Nam News presents a round-up of last year's major developments.
The property market starts to thrive
The real estate market's frozen period ended and the market was recovering, according to the Ministry of Construction. Deputy Minister Nguyen Tran Nam pointed out that the number of properties sold greatly increased in both Ha Noi and HCM City, as many projects placed properties for sale at more affordable prices, housing supplies were adjusted to meet market demands, especially for low-income earners, and property inventories declined.
The Law on Housing and the Law on Real Estate Business passed
The National Assembly passed the Law on Housing and the Law on Real Estate Business (amended) on November 25, 2014. The two laws, together with other policies, were expected to create breakthroughs in the property market. The two laws will come into effect on July 1, 2015.
Foreigners permitted to buy houses in Viet Nam
With the revised Law on Housing, foreign organisations and individuals can now purchase houses in Viet Nam, along with broader categories of individuals and organisations entitled to purchase houses. Those included investors with residential house construction projects in Viet Nam, foreign-invested enterprises, branches and representative offices of foreign enterprises, foreign investment funds and branches of foreign banks operating in Viet Nam, along with foreigners permitted to enter Viet Nam. The new regulations seeks to attract foreign investment in the property market. However, foreigners are not allowed to own more than 30 per cent of apartments available as condominiums. Notably, the revised law does not distinguish between Vietnamese who settle in the country and those living overseas.
Real estate ranks second in FDI attraction
According to the Foreign Investment Agency under the Ministry of Planning and Investment, from the beginning of 2014 until December 15, 2014 the real estate sector attracted US$2.54 billion in foreign direct investment (FDI), accounting for 12.6 per cent of the country's total registered FDI capital, which is nearly three times higher than that in 2013.
Conditions loosened for loans from the VND30 trillion support package
Conditions for loans from the Government's VND30 trillion ($1.4 billion) support package for the property market were loosened to ensure the support package works to stimulate the market. Recently, the State Bank of Viet Nam issued a circular to expand beneficiaries of the bailout package, while extending the duration of preferential interest rates. Accordingly, individuals purchasing commercial houses worth VND1.05 billion (US$50,000) or less in urban projects that authorities have approved are entitled to financial assistance from the national real estate bailout programme. Package beneficiaries include civilian and armed forces members and employees, as well as households and individuals who build social housing for workers and students. Also, the maximum term that homebuyers or renters may enjoy preferential interest rates was extended from 10 to 15 years. According to reports by five commercial banks that were selected to administer the package, loans from the package were worth VND7.944 trillion ($377 million) as of mid-October, 45 per cent of which was disbursed.
Value of an apartment calculated based on the net usable area
With the Circular 03/2014/TT-BXD, which took effect on April 8, 2014, the value of an apartment will be henceforth calculated based upon the net usable area. Previously, the area of an apartment had been calculated from the centre of its walls. The new regulation required that the area be calculated from the walls' edges.
Time reduced for granting house ownership certificate
From the beginning of 2015, in Ha Noi, the time for granting house ownership certificates was reduced from 52 to 20 days. The Government also issued regulations that said investors would be fined a maximum VND1 billion ($47,160) if their procedures were slow in granting house ownership certificates for home buyers.
Mergers and acquisitions (M&A) in the property market recovered in 2014 and the recovery was forecast to continue in 2015.
Several important agreements included Him Lam buying Hoang Anh Gia Lai's project in HCM City's Thu Duc District, Dat Lanh Real Estate Company's 8x Thai An Project transferred to Hung Thinh, CEO Group selling a part of its project in Phu Quoc and Tung Shing Corp from Hong Kong buying 53 per cent of Movenpick Hotel in Sai Gon.
Tourism real estate backs
The tourism property segment shows signs of recovery with the release of a number of projects in 2014. High-profile projects included Vinpearl Phu Quoc of Vingroup, Sonasea Villas and Resort of CEO Group, Crowne Plaza Phu Quoc and Little Viet Nam of Syrena Viet Nam.
Maximum land price in Ha Noi doubled
According to the new land price framework, which was applied from the beginning of 2015 to the end of 2019, the maximum land price in the capital city was VND162 million per square metre, doubling the previous price.
The city said the new land price framework seeks to narrow the gap with market prices and harmonise benefits for the Government, land users and land owners. — VNS