Since the fourth quarter of 2022, Da Nang’s real estate market has faced unprecedented hurdles with a sharp drop in the number of real estate transactions. Therefore, it is necessary for the city to take drastic measures to address problems related to legal and capital bottlenecks in a bid to help the market develop sustainably.

It is necessary to soon remove difficulties in some real estate projects to unlock capital resources and contribute to the city's socio-economic development. Photo: HOANG HIEP

Legal and capital bottlenecks

According to Director of the Real Estate Research and Training Institute Nguyen Duc Lap, the real estate trading and transfer market in Da Nang, and in Viet Nam as a whole, is facing many difficulties and challenges due to the impact of the disruption of credit flows in the market and high interest rates.

Since the time when the Da Nang real estate market reached the peak of transaction prices in June 2022, the main segment of land plots in the southern and western sides of the city has witnessed a 20-30% in the prices, whilst there are few transactions.

The main reason is thought to be a continual interest rate hike trend. Meanwhile, the incomes of those who have real and urgent needs for accommodation do not have enough financial conditions to buy or borrow additional capital to purchase real estate products.

Mr. Lap remarked the local real estate market has been facing serious problems such as a lack of capital access, credit tightening, and legal bottlenecks.

“The key is to remove the legal and capital bottlenecks, including real estate corporate bonds, thereby unlocking capital sources, reducing inflation pressure, and creating a premise to bring loan interest to a reasonable level. This will help promote the recovery of the local real estate market” he added.

He said the number of transactions to buy and sell houses and land will depend a lot on the State's solutions. Da Nang has high expectations for the rapid recovery of the tourism market, hereby boosting the development of tourism products in the real estate segment.

Particularly, some tourism-related real estate types such as restaurants, hotels, and rental premises and apartments are expected to gradually recover and increase prices again. The rental real estate market will develop more bustling in the context of the gloomy buying and selling market. The new supply of real estate will continue to face many difficulties due to legal issues and many changes in legal policies and planning, Mr. Lap noted.

Mr. Vo Hong Thang, Deputy Director of the Research and Development Department of the DKRA Group JSC, predicted that the real estate market in 2023, including Da Nang, will continue to face challenges. The price drop may continue to take place in the coming time on the secondary market, especially for investors with bank loans who are having financial difficulties.

Currently, the problems and difficulties of the real estate market have not been resolved, making the market quiet. In addition, a series of real estate businesses are facing financial difficulties. With the current high lending interest rate of 12-14%/year and a sharp drop in liquidity, it will be difficult to use financial leverage to invest in real estate.

The implementation of a real estate project in Lien Chieu District is delayed because of problems related to land and investment procedures. Photo: H.H

Creating conditions to unlock resources of real estate projects

According to the municipal Department of Construction, 75 urban and commercial housing investment projects, providing a total of about 67,035 houses and apartments, are underway in the city. 48 of these projects have been granted investment licences and policy decisions. Four projects have been calling for investment by the city, whilst 23 others have been implementing investment and construction procedures. Currently, most of the real estate projects are being implemented slowly or suspended due to difficulties and obstacles.

Along with the attention and direction of the central government and Prime Minister, over the past time, the city has proposed the central government to remove difficulties and obstacles facing real estate projects, especially those related to land, and create conditions to unlock resources for the city’s socio-economic development.

The municipal People's Committee recommends the central government to consider and supplement the transitional regulations to continue to allow the transfer of land use rights for people to build their own houses for the remaining areas of urban projects.

Heed will be on proposing the city branch of the State Bank of Viet Nam to take such measures as rescheduling, deferring debt, tax, and land rent for real estate businesses in an effort to support the local real estate market.

With the special attention and direction of the central and municipal governments, ministries, branches and localities, the real estate market is predicted to prosper in 2024 when the legal bottlenecks for real estate projects are gradually removed, and the revised Land Law and Housing Law are passed and take effect.

Reporting by HOANG HIEP - Translating by M.DUNG