Speakers at a forum held in HCM City on Wednesday to discuss ways to improve the real estate market. — VNA/VNS Photo

HCM CITY — The sluggish property market is expected to benefit from a surge in foreign direct investment and amendments to the Land Law, experts told a forum in HCM City on Wednesday.

Trương Khắc Nguyên Minh, deputy general director of Vietnam Industrial Parks, pointed to the significant increase in FDI in the property sector, which saw a 70 per cent year-on-year jump to over $1.98 billion as of May 20.

This influx of foreign capital, accounting for nearly 18 per cent of total FDI, has made it the second most attractive sector after manufacturing, he said.

HCM City, Hà Nội and Hải Phòng cities and Bắc Giang and Quảng Ninh provinces have been some of the investment hotspots due to their strategic location and excellent infrastructure.

Foreigners are increasingly drawn to the Vietnamese property market due to competitive prices, according to a survey by the Vietnam Institute of Real Estate Studies.

According to a report by Cushman & Wakefield, a positive outlook for FDI in the property sector is projected from 2024 to 2026, driven by low interest rates and government support policies.

Leading investors from places like Singapore, Hong Kong, mainland China, Japan, and South Korea are focusing on the high-end and luxury segments, with Singapore topping the list with nearly US$3.25 billion.

Nguyễn Đức Lệnh, deputy director of the central bank’s HCM City office, said there has been a 1.61 per cent increase in real estate loans in the city in the first four months of the year.

New developments in the Thủ Thiêm urban area in HCM City. — VNS Photo Bồ Xuân Hiệp

Expectations from revised land law

Experts also expect the market to benefit from the revisions to the Land Law.

Prime Minister Phạm Minh Chính has instructed ministries and other agencies to enforce the amendments from July 1 instead of early next year as originally planned.

They are expected to increase the supply of social housing by encouraging enterprises to invest in the segment.

They will particularly benefit two main groups: overseas Vietnamese and individuals who are resettled and have received compensation.

It allows overseas Vietnamese to buy houses in Việt Nam and get ownership, which is expected to attract more investment from them.

It also stipulates that resettlement areas must meet conditions related to technical and social infrastructure.

But the property sector has admittedly been facing challenges such as debt repayment pressures and fraud and other financial scandals.

Many bond issuers, mostly real estate developers, have missed interest and principle payments since the end of 2022 following the arrest of Trương Mỹ Lan, the chairwoman of Vạn Thịnh Phát, for financial fraud.

This has shaken market confidence.

Experts said it would take three to five years for the market to fully recover. — VNS