Chairman of Hoa Binh Corporation signals positive outlook for real estate companies’ recovery

At the Annual Spring Real Estate Forum held today, March 15th, Mr. Le Viet Hai, Chairman of the Board of Directors of Hoa Binh Construction Group (stock code: HBC), shared some insights into the real estate market.

Optimistic outlook for the tourism real estate market

Firstly, Mr. Hai provided positive information regarding the tourism real estate market: The number of international visitors to Vietnam is expected to reach 18 million, equal to the number of pre-pandemic visitors.

“I believe that, based on this, tourism real estate projects will be able to be quickly consumed. Businesses investing in this sector will see an improvement in revenue, as previously, their products were affected by the pandemic and were not being sold,” shared Mr. Hai.

He also emphasized that this is an encouraging signal, indicating that real estate companies will recover in the near future.

Challenges in the Ho Chi Minh City real estate market

Secondly, concerning the real estate market in Ho Chi Minh City, from before the pandemic until 2023, the high-end segment has seen an 82% recovery, while affordable housing has decreased by 40%, and cheap housing is virtually non-existent in the market. “This is a sad situation,” Mr. Hai revealed.

“The core problem lies in the social housing incentives, such as project approvals, design approvals, target customers, project scale, and pricing, which are still very complicated. Approximately two years ago, we worked with a social housing investor, and the project already had an investment license but it was only at the beginning of this year that we completed the procedures for building the social housing to implement it,” he shared.

According to the statistics of the Ministry of Construction, the number of social housing projects proposed is significantly lower than the set target. “I believe the root cause lies in the state’s incentives for land use tax, VAT tax, credit, and management costs that are not yet suitable for market laws, making it difficult to reach a consensus between the government and investors,” shared Mr. Hai.

Mr. Hai suggested that the method should be that investors must pay for land use before bidding for the project. The land use payment can be made upfront or after, but there should be no incentives for land use or VAT tax, or credit incentives. These incentives can be calculated later.

If buyers meet the state’s incentives criteria, the state will collect payments from the investors and refund them to the buyers. Because there are projects with 4-5 thousand units but the market cannot absorb them due to people not meeting the criteria to enjoy social housing, this will lead to congestion. When products cannot be sold, investors will not dare to invest boldly.

In conclusion, Mr. Le Viet Hai’s insights highlight both positive and challenging aspects of the real estate market. While tourism real estate projects are expected to recover, there are still obstacles to overcome in the Ho Chi Minh City real estate market. The government’s incentives need to be aligned with market laws to foster the development of the real estate sector.

For more information on business and finance, visit Business Today.