THE REAL ESTATE BUSINESS MARKET IN VIETNAM: CURRENT SITUATION AND PROPOSALS
THE REAL ESTATE BUSINESS MARKET IN VIETNAM: CURRENT SITUATION AND PROPOSALS
Nguyen Thi Minh Phuong
Le Anh Đuc
Nguyen Le Khanh Duy
Duong Thi Phuong Trang
Pham Linh Chi
Đo Thi Viet Hue
Institute of Accounting and Auditing, National Economics University
Abstract: In 2024, the Vietnamese real estate market is assessed to have many positive changes after a long period of stagnation due to the impact of the COVID-19 pandemic. The market’s transaction flexibility is being adjusted in a positive direction, and buying and selling activities have become vibrant again.
However, there are still many inadequacies in the State’s legal framework, credit, and loan systems, causing instability in real estate prices. In response to this situation, the State has actively promoted and implemented several new laws and policies to encourage the market’s stable development, supplement and amend regulations in the construction and project transfer process, train and foster services, and ensure the information network.
Especially, the Law on Real Estate Business, effective from August 1, 2024. The article evaluates the real estate market’s status in the first half of 2024, highlighting some new points in the Law on Real Estate Business 2024 and drawing some international lessons learned. Based on this, it proposes several solutions in the legal system, state policies, and the application of suitable new technologies in management to create conditions for the recovery, stability, and sustainable development of the real estate market in Vietnam.
Keywords: Real estate investment, Management experience, Real estate law, Vietnamese real estate market.
Introduction:
The Vietnamese economy has been positively and impressively transformed in recent years, as assessed by the World Bank. The State’s economic and political reforms have helped stabilize and increase people’s income. This income growth has led to an increased demand for real estate purchases with various types and diverse purposes and the development of domestic real estate businesses.
Therefore, the real estate sector has been a promising investment channel in recent years with high profit margins. Although in 2023, the Vietnamese real estate market experienced stagnation in many segments, many long-standing issues that had been “dormant” for quite some time began to “surface” from May 2022 onwards. The main causes were legal project issues, credit loans, bond issuance, and capital mobilization.
In the first six months of 2024, the market gradually entered a new cycle, returning strongly after many years of significant transaction volume declines due to the COVID-19 pandemic and other factors.
Many new projects have been deployed and commenced, leading to an improvement in the supply and prices of various types of real estate. However, real estate prices are still showing abnormal fluctuations, along with delays in the gradual adaptation to new market laws. Some highly sought-after supply sources cannot be introduced to the market due to remaining legal procedure obstacles.
Furthermore, buying or selling real estate often requires much time and effort from intermediaries and incurs high fees. High costs include those related to time delays, outdated technology, and complex data-sharing mechanisms (Latifi et al., 2019).
Therefore, in the new phase, the real estate market has yet to achieve stable and sustainable development, and investing in the market remains challenging. To increase profitability and benefits from real estate transactions for investors with various types such as apartments, land plots, and townhouses, the profitability of the real estate sector must be considered.
Investors need to grasp the market situation, trends, and current issues. Given the purpose of providing investors with information on the real estate market’s status, limitations, and investment issues in particular and the national economy in general, it is necessary to develop research on the real estate market to propose solutions for effective management and investment.
I. Current State of the Vietnamese Real Estate Market
The Vietnamese real estate market showed signs of slowing down in the second half of 2022. A series of measures related to corporate bonds, tightening of credit, and the legal troubles of some corporate leaders made the market sentiment cautious. This led to the stagnation of transactions and the suspension of many projects, even those in progress.
In this context, numerous policies and resolutions were issued by the Party and the State to address these issues and support the market’s recovery and sustainable development. Notably, new laws were introduced, such as the Law on Land, the Law on Real Estate Business of 2024, and the Law on Housing, which gradually improved the Vietnamese real estate market.
The first six months of 2024 showed positive signs of recovery. The supply in the Vietnamese real estate market was very active, with 22,861 new products in the second quarter being offered for sale for the first time. In the first six months of 2024, there were 27,361 new products, with 89% belonging to the housing segment and 11% to tourism and resort real estate.
Regionally, the Northern market recorded the most robust growth, followed by the Central region, while the Southern region still faced many difficulties in boosting supply. Regarding the housing supply structure, the high-end apartment segment accounted for the largest proportion, contributed mainly by new projects focused on luxury and high-end apartments.
Although the proportion of affordable high-end apartment supply improved, the graph shows that this segment only increased by about 1% quarterly, primarily contributed by social housing projects in secondary and tertiary cities and provinces.
Real estate transactions in the first six months were successful, with 20,600 transactions, three times higher than the same period in 2023. In the second quarter of 2024, 14,400 transactions were successful, achieving an absorption rate of 52%, with the condominium segment contributing 75% of these transactions.
There was a strong growth in the number of transactions in the low-rise and land plot segments, increasing by 60% compared to the previous quarter. Additionally, condominium projects that were opened for sale all recorded positive growth and good absorption rates, with the most notable projects in the Northern region, such as Lumi Hanoi and Imperia Sola Park.
Regarding the transaction structure, the high-end apartment segment (selling price > VND 50 million/m2) had the best transaction results, accounting for 42% of the transaction structure in the second quarter of 2024. Following were the low-rise and land plot segments and the mid-end apartment segment, accounting for 24% and 18% of all segments, respectively.
Over the quarters, from the first quarter of 2023 to the second quarter of 2024, the transaction proportion tended to increase over time in the affordable, high-end, and luxury apartment segments, with increases of 2%, 13%, and 7%, respectively.
Conversely, a downward trend over time was observed in the low-rise, land plot, and mid-end apartment segments, with decreases of 16% and 5%. This increasingly shows the improvement in customer and investor confidence, with cash flow circulating more smoothly.
In many segments, the real estate market is experiencing significant growth, with the most noticeable price increases in the land plot and high-end condominium segments. Prices in the low-rise segment fluctuate greatly, ranging from VND 16 million to VND 227 million per square meter. Liquidity in this segment continues to improve, especially from the central region onwards, with many individual low-rise products recording “cut-loss” situations.
Similarly, prices in the condominium segment range from VND 12.6 million to VND 150 million per square meter. The land plot segment has prices fluctuating between VND 7 million and VND 68 million per square meter, with land plots priced below VND 2 billion in some northern provinces showing a slight increase of 5-10%.
The selling prices in the primary segments continued to rise in the second quarter, primarily due to the new supply consisting mainly of completed projects positioned at high standards. Some mid-end condominium projects also recorded a price increase of 3-5% due to scarcity in this segment. Low-rise and land plot projects maintained relatively suitable prices for buyers.
However, the market witnessed a clear regional differentiation in land plot prices and secondary segment villas/townhouses with red book certificates.
The social housing segment is an urgent issue, especially after a series of tragic fires in 2023 at mini apartment buildings and boarding houses, causing significant property damage, health impacts, and threats to human lives. Additionally, in the context of continuously soaring commercial housing prices reaching new highs, promoting the development of this segment is considered a critical solution to address the current shortage of affordable housing supply.
At the beginning of 2024, the social housing segment continued to face both scarcity and difficulty in sales. In reality, 39,884 units have been completed, achieving 9.3% of the 2021-2025 plan and increasing by 0.4% compared to the end of the first quarter of 2024. Moreover, 128 projects were initiated, with a scale of up to 115,379 units. The number of approved investment projects is 300, with a scale of 262,937 units.
However, obstacles remain in verifying eligible buyers and renters of social housing, resulting in a mismatch between supply and demand. Therefore, state management agencies need to consider and support specific measures to maximize social welfare goals and avoid wasting land resources.
Although the Vietnamese real estate market witnessed a strong recovery in the first six months of 2024, several difficulties have not been thoroughly addressed. Four major unresolved issues include the supply-demand imbalance, unreasonable product structure, continued upward trend in real estate prices, and the deadlock of enterprises in accessing finance and issuing bonds.
In response to this situation, the Law on Land, the Law on Housing, and the Law on Real Estate Business were urgently enacted to quickly resolve the current difficulties and promote market development.
II. New Points in the Law on Land, the Law on Housing, and the Law on Real Estate Business
The Vietnamese real estate market in 2024 is expected to undergo significant changes as the Law on Land, the Law on Real Estate Business, and the Law on Housing take effect from August 1, 2024 (Law No. 43/2024/QH15). The amendments to these three laws aim to help local authorities resolve many difficulties and limitations, while also screening investors and promoting a more positive and transparent real estate market.
- The Law on Land
The revised Law on Land includes numerous more flexible provisions, helping to reduce the time and costs for investors to access and develop projects while establishing a more comprehensive legal framework for handling complaints quickly and clearly, addressing the existing limitations of previous laws.
One of the most notable changes is the abolition of the land price framework, allowing land to be valued according to market principles to ensure that property prices reflect reality and are not excessively different from other commodity prices.
Additionally, the law clearly and specifically stipulates cases of land allocation and land lease without auctioning land use rights and without bidding for investor selection, thereby increasing transparency in existing real estate market transactions.
The changes in the revised Law on Land of 2023 are expected to breathe new life into the previously sluggish real estate market, reviving many long-dormant properties as legal obstacles are removed.
Experienced and capable enterprises will have a higher success rate in auctions and tenders due to the new regulations, which minimize negative factors and lack of transparency in weaker enterprises.
Consequently, the costs that enterprises use for project development are likely to decrease, allowing real estate prices to return closer to their actual value.
2. The Law on Real Estate Business
The Law on Real Estate Business 2023, effective from August 1, 2024, includes several important revisions aimed at protecting buyers’ rights, screening investors, and enhancing market transparency.
Particularly, foreign-invested enterprises are now facilitated and have expanded business opportunities as they are permitted to engage in real estate business as domestic entities without needing to undergo foreign investor procedures under the new regulations.
The law also addresses deposit regulations, allowing real estate project owners to collect a deposit not exceeding 5% of the sale or rental price once the property is eligible for future trading. This provision reflects the true nature of deposits in real estate transactions, while also reducing risks for the parties involved.
The new regulations also tighten conditions for housing and construction business operations as stipulated in the Law on Real Estate Business 2023. Previously, investors’ financial obligations were required to be fulfilled according to the specific policies of each locality, causing inequality and a lack of uniformity.
However, the new law mandates the completion of financial obligations related to land according to the law for land attached to housing and construction projects brought into business. Numerous additional provisions in the Law on Real Estate Business ensure that information becomes transparent before transactions, and contract conditions become stricter.
- The Law on Housing
The new Law on Housing 2023 has focused more on investing in social housing projects. In recent times, preferential policies for social housing investors lacked substance and were not attractive enough to entice businesses to participate. However, with the new regulations, eligible investors will receive many incentives, such as exemption from land use fees and rents for the entire project area. Thus, the new Law on Housing has paved the way for businesses to invest more heavily in social housing projects.
The changes in the Law on Land, the Law on Real Estate Business, and the Law on Housing 2023 not only create favorable conditions for investors but also contribute to improving transparency and fairness in the real estate market, promising many development opportunities for enterprises.
However, there are still many unresolved issues and inadequacies that these laws have not thoroughly addressed, such as cumbersome legal procedures at certain stages or the failure to fully protect the rights of buyers and sellers.
Therefore, it is essential to selectively learn and inherit the lessons and real estate management experiences from more advanced countries, identifying beneficial and new points from the international context that suit the economic conditions and characteristics of the Vietnamese real estate market to further refine these laws and policies.
III. Some International Experiences in Real Estate Market Management
- Real Estate Transaction Support Systems
In Australia and New Zealand, real estate is primarily managed through trust accounts by agents. The agents’ tasks include negotiating with clients, preparing various contracts, collecting rent, mortgages, or receivables under contracts. Having these tasks centralized with agents (brokers) has benefited individual real estate investors during negotiations. However, agents must be licensed to perform services and receive commissions from transactions.
In the United States, the real estate market operates very dynamically through the Multiple Listing Service (MLS). Information about real estate conditions in the area is regularly updated by MLS. By successfully utilizing this information in transactions, the MLS organization receives a commission share from the broker. The establishment of MLS has addressed information shortages in transactions, affecting the transaction process and time. Brokers can clearly understand the real estate they are working on and easily attract investments in the land or house.
In Singapore, a unique aspect of real estate registration law is that lawyers providing real estate transfer consulting services must be certified. All legal issues related to purchase and sale contracts must go through lawyer consultations, and the transfer documents must be registered with the property registration office if confirmed by a lawyer. Hence, lawyers handle all information gathering about real estate, ownership documents, related legal requirements, and complete the transfer and transaction procedures.
- Experiences in Buying and Leasing Future Real Estate
Countries generally allow transactions related to real estate that will be formed in the future to take place. This type of transaction is strictly regulated and varies among jurisdictions to provide the best benefits for customers. In South Korea, the Housing Guarantee Corporation (GHLC) was established to check the financial capacity of real estate enterprises and homebuyers. Future rental deposits are also guaranteed by this organization. This setup establishes appropriate guarantee levels to minimize customer risks when developers fail to fulfill their obligations.
According to regulations, developers must register with the Housing Guarantee Corporation if they want to sell or lease housing projects that will be formed in the future. This registration is required to obtain necessary documents and pay a guarantee fee.
- Experiences in State Real Estate Market Management
Land management policies vary across countries depending on their conditions and objectives. Otubu’s (2008) research highlights that individuals realize their full potential in life based on their relationship with land.
Thus, the necessity of government intervention in real estate market management is undeniable, as it greatly impacts the market’s efficient operation, boosts both domestic and foreign investment, and contributes to the national economy. The significant importance of land for humanity and society necessitates state intervention through comprehensive and effective real estate laws.
Regarding land and real estate, the United States adopts a very liberal and open trade policy. Everyone, including foreigners, can own land in the country. It is crucial to understand how land users perceive the security of ownership rights before implementing any land policy or program (Jayne et al., 2017).
In the U.S., land and housing purchase procedures are transparent, clear, and highly secure regarding property rights. However, land and real estate taxes in the U.S. range from 1% to 5% by state, a relatively high tax rate.
China has implemented a supply-demand balancing policy to ensure the efficient functioning of the land and real estate market. The concession form is employed by the Chinese government to control land supply and closely monitor the total land area provided for construction.
Compensation-based land use regulations must be strictly adhered to, bidding activities are encouraged, and the management of land use right transfers and land prices is improved. Regarding land valuation, the main principle is that land prices are not determined by humans but are naturally adjusted by the market.
Another unique aspect in China is that housing and land prices are determined independently of each other. In addition to improving the Land Management Law, the government has established procedures related to land valuation to prevent speculation.
In 1994, the government issued real estate management regulations to limit land quantity and regulate the supply-demand relationship, requiring investors to invest at least 25% of the total project value in land if they want to continue transferring it. If investors fail to fulfill this obligation within a year, they will be fined, and if they still do not invest after two years, the land will be reclaimed by the state.
The Japanese real estate market is one of the largest globally, offering great opportunities for investors. According to statistics, the total value of real estate in Japan has surpassed trillions of dollars. Over the years, this market has seen stable growth due to factors such as urbanization, population growth, and government policies aimed at promoting economic development.
The Japanese real estate market is influenced by three main factors: economic stability and development, demographic trends, and government policies and regulations. The Japanese government has implemented various programs to attract investment from both domestic and foreign sources into the real estate sector.
These policies are designed to simplify regulations, enhance transparency, and promote economic growth. For instance, the establishment of economic zones and the implementation of specific economic measures have created opportunities for urban redevelopment projects and encouraged investment in certain areas.
Therefore, investors need to understand government policies, tax regulations, and property ownership laws to navigate the market effectively and make informed investment decisions.
IV. Some Proposals
Based on the current situation and lessons learned from other countries, the article proposes several solutions for managing and operating the real estate market as follows:
- Proposals from International Experience
– First, establish an intermediary real estate brokerage system and legal transaction agents.
According to the experience of developed countries, the real estate market often involves real estate brokerage centers and intermediary transaction agents. This approach can be applied to the Vietnamese real estate market. However, since this market in Vietnam lacks a high degree of specialization, small investors participating in the market are mainly amateur investors or ordinary people seeking homeownership.
Therefore, awareness of the transaction market in Vietnam is not truly clear and accurate, leading to easy manipulation by large investors, causing market imbalance. Having a third party with knowledge and expertise is necessary to ensure market stability. These entities can provide more accurate and fair information to the parties involved in transactions.
Additionally, real estate buying and selling advisory services should be further developed. Establishing specific advisory organizations and departments can combine roles such as lawyers and legal experts to ensure both market information and legal compliance.
However, the State should also be involved in managing these advisory services. Strict regulations are needed in training and certifying consultants to ensure accurate advisory practices and sustainable real estate market development.
– Second, the State needs to build a transparent, highly secure market information network.
In a volatile real estate market, effective management requires a comprehensive and transparent information system. A reliable information network will actively support controlling and promptly addressing market issues, enabling authorities to respond quickly to market changes and fluctuations.
Additionally, the Vietnamese real estate market should ensure the security of investors’ participation in the market. The State needs strict policies and regulations to protect customers’ personal information, transaction information, and other sensitive data. This builds investor trust in the Vietnamese real estate market.
With a transparent and secure information platform, investment capital can be attracted domestically and internationally, creating diversity and openness in the market. This promotes the sustainable development of the Vietnamese real estate market.
Alongside policies and regulations, the State should flexibly apply scientific and technological advancements in managing, controlling, and building an information network, while ensuring high security in the market.
– Third, actively promote the emerging market of future real estate.
Learning from international experiences, especially from South Korea, the future real estate market is a highly potential field that the State should focus on developing. However, to effectively conduct transactions in this market, the State needs to establish specific, reasonable regulations, policies, and laws to ensure the rights of both sellers and buyers. This market is unique because the assets are not available immediately but will be formed in the future, thus requiring strict regulations on the transaction process to avoid unreasonable price increases.
Additionally, the State needs to conduct reviews and monitor the construction of projects to ensure the timely formation of future real estate assets. Ensuring the quality and progress of construction will help enhance the confidence of investors and buyers in this market.
Furthermore, policies aimed at risk mitigation are also crucial. Specifically, the State needs to set requirements for documentation and guarantee fees when participating in market activities. Moreover, land taxes should be applied to prevent hoarding and ensure the stable operation of the real estate market.
Finally, the State can establish specialized departments, organizations, or companies to support managing and operating the future real estate market. These organizations will help ensure the sustainable and efficient development of the real estate market, thus creating a safe and transparent investment environment.
- Some Proposals in State Management
In managing the real estate market, the role of the State is crucial, especially during the economic recovery phase post-COVID-19. Some studies indicate that the government is a fundamental factor in life satisfaction during times of disaster or difficulty (Alamsyah & Zhu, 2022; Tan et al., 2021). Given the situation in the first half of 2024 regarding the real estate market in Vietnam, the article proposes several solutions and recommendations in State management as follows:
– First, the State needs to enhance the legal framework.
Ministries and departments must actively review and update regulations and laws to address urgent issues in the real estate market promptly. This aims to establish optimal, efficient policy tools that ensure sustainable links between the capital market and the real estate market.
Strengthening the State’s legal framework involves decentralizing and empowering the political system, enhancing proactivity, and shortening the time and spatial distance in addressing arising issues. An efficient management system from central to local levels must be established.
It is necessary to grasp information, prevent, and strictly handle legal violations, especially tax evasion in real estate businesses. The legal framework, in general, and in the real estate sector, in particular, should promptly disseminate the Business Law to relevant stakeholders to ensure its effectiveness.
During implementation, timely adjustments and improvements should be made to align with and support the people, businesses, and investors while maintaining legal compliance.
– Second, the real estate market needs regulation.
The real estate market consists of key components: participants in real estate transactions, transaction objects (land use rights, assets attached to land), and market institutions. Therefore, developing the real estate market requires harmonious coordination between market mechanisms and the State’s management system.
To create appropriate policies and promptly address market fluctuations, the State needs to provide accurate assessments and an objective view of supply-demand relationships and market segments.
This will help formulate policies to regulate this relationship, prevent artificial land price inflation, and protect the legitimate rights of low-income people, focusing on the broader public interest rather than short-term economic growth.
This is clearly demonstrated by timely solutions to address inflated land bidding in the suburban areas of Hanoi. The Prime Minister has directed and issued detailed documents regulating the Law on Land, including provisions on land use rights auctions.
Relevant ministries and departments are required to intensify meticulous reviews to avoid market manipulation and price inflation, ensuring a healthy market. Prompt measures must be taken to prevent and address such issues, facilitating the stable and sustainable development of the real estate market.
– Third, diversifying funding sources is also a policy worth considering.
According to the Modern Portfolio Theory (MPT) developed by Harry Markowitz (1952), the government needs tools to diversify investment capital from various sources, reducing dependency on banks, and tightening regulations to prevent the reckless and unreasonable use of credit.
Additionally, promoting expansive monetary policies and flexible, reasonable fiscal policies can help avoid sudden changes that could cause market imbalances. Protecting the rights of participants, investors, and community interests is a prerequisite for establishing a healthy investment environment.
Ministries and agencies from central to local levels need to implement synchronized tasks and solutions according to Government Resolution No. 11/NQ-CP on the Program of Economic and Social Recovery and Development.
– Fourth, the development of social housing has been and continues to be a government target to ensure social welfare.
According to Government Resolution No. 11/NQ-CP on the Program of Economic and Social Recovery and Development, the State strongly promotes the development of social housing, housing for industrial park workers, and the renovation of old apartments and living quarters.
Some public management studies have indicated that managing public housing with social housing rental costs without compensation seems ineffective (Saporito & Perobelli, 2021). Therefore, the State needs appropriate compensation and land clearance plans for residents in areas designated for social housing construction.
The Ministry of Construction, in coordination with other ministries and agencies, organizes the implementation, urging and guiding localities to actively implement the government’s resolution.
Additionally, it reviews, supervises, detects, and strictly handles violations in implementation, ensuring the re-planning and allocation of land in localities to develop social housing areas according to the law and State directives. It ensures serious compliance with the land allocation ratio for social housing and housing for industrial park workers in housing and urban projects.
Localities should collaborate to review and announce the list of social housing and worker housing developers, and State commercial banks can support projects with interest rates.
Furthermore, the Ministry of Construction, in coordination with relevant parties, ensures the transparent implementation of information systems in the housing and real estate market. It also researches and proposes new, suitable policies for developing the community housing and social welfare sector. Additionally, strict supervision of enterprises in mobilizing funds for real estate on the stock market is necessary.
– Fifth, developing infrastructure contributes to stabilizing the volatile real estate market.
Investment and focus on infrastructure, as new and creative development spaces continuously attract investment capital, create conditions for the development of industries and services, while promoting the emergence of new urban areas over time.
Additionally, appropriate mechanisms and policies need to be established by the State to inspect, supervise, and evaluate causes from multiple perspectives, ensuring market transparency, protecting citizens’ rights, and maintaining continuous infrastructure development to ensure the stability of the real estate market in particular and Vietnam’s market economy in general.
– Sixth, improve the business environment in the real estate market.
Actively improving the business environment attracts investors to participate in the market, laying the foundation for macroeconomic development, stabilizing inflation, promoting production development, and creating jobs for people in many sectors and regions nationwide.
Constantly researching, experimenting, and innovating policies, proposing new solutions to adapt to market fluctuations, and promoting market development are essential. More stringent monitoring and supervision of market structural shifts are necessary. However, management must be balanced to avoid excessive imposition and restrictions that limit market development.
– Seventh, enhance mass communication, providing timely and transparent information to citizens and traders.
According to research by Shivani Kasturia and Divya Girdhar (2024), Internet news media have played an important role in message dissemination. Increasing multimedia communication, disseminating financial knowledge and legal frameworks, and enhancing legal education among the general population through various information channels are crucial.
Additionally, to improve citizen awareness, a network of land information linked with real estate information should be created. Encouraging non-cash investments in real estate transactions helps reduce tax evasion and legal violations by real estate business owners.
- Proposed Application of Technology in Real Estate Management
The application of technology in real estate has become an inevitable trend, revolutionizing the way connections are made between sellers, buyers, and intermediary service providers. To keep up with this pace of development, real estate businesses need to actively invest in technology applications to optimize operations, achieve better results, enhance user satisfaction, and increase market transparency, aiming towards a sustainable future.
3.1. Proptech
The emergence of Proptech networks has created new advancements in the traditional real estate industry. Urban development, the expanding middle-income social group, and the increasing expenditure of residents are contributing to the rapid expansion of Proptech worldwide and in the ASEAN region, including Vietnam.
The “PropTech” or “Platform Real Estate” markets (Ferreri & Sanyal, 2022; Fields & Rogers, 2021) are new and emerging in land data, supported by rapidly developing digital housing networks.
The real estate market in Vietnam is expanding thanks to the application of innovations in the industry, particularly in the field of Proptech. Proptech, with its digital tools like websites, infrastructure systems, and mobile apps, is increasingly influencing various sectors, including management, leasing, buying, and transferring real estate.
Some notable benefits of Proptech include:
– Immediate access to information: Proptech allows for the collection and processing of customer data, helping to control accounts and conduct transactions more efficiently. This data provides insights into customer actions and enables changes to products and services to meet actual demands.
– Efficient payment processing: Proptech ensures clear transaction processes with good outcomes, from price estimation to coordinating with intermediaries and agents to complete transactions.
– Enhanced operational efficiency: Proptech simplifies and improves real estate operations by digitizing many processes, from asset management to user connection via chatbots when the owner is unavailable.
– Virtual and augmented reality experiences: These tools allow customers to tour properties remotely and carefully consider their options before making a purchase or sale, enhancing their experience.
– Access to underdeveloped areas: Proptech helps bridge the gap between developed and rural areas by offering personalized solutions through AI and assisting people in less developed regions.
– Sustainable technology applications: Proptech promotes sustainability by providing eco-friendly and energy-saving solutions. Customers can remotely manage properties and control smart devices like lighting, heating, security, and other automation through the Internet of Things (IoT).
3.2. Internet of Things (IoT)
Going into more detail, we first need to talk about IoT technology. IoT is widely applied in real estate, especially based on integrated technology systems (Smart Home/Building) and advanced energy coordination (Smart Energy).
We are living in an era where life is intertwined with AI. Recently, the combination of IoT, artificial intelligence (AI), and drones has opened up new possibilities, such as deploying AI Droids to monitor construction and meet safety standards.
Moreover, IoT plays a crucial role in real-time operational data management, including space management, security, and controlling the number of people entering and exiting buildings. IoT sensors help monitor and analyze the functionality and efficiency of space usage, optimizing management and operation.
Some specific applications include:
– For customers: IoT provides accurate information about real estate, including location and related details. This allows users to thoroughly consider the address and condition of the property without needing to visit in person.
– For consultants: IoT technology modernizes digital techniques in the real estate industry, helping professionals connect more effectively with remote clients using digital platforms and modern technology.
– Regarding real estate businesses: IoT supports companies in meeting the dual transformation standards of “Digital and Green Real Estate” by integrating green solutions right from the design and construction phase to operation. For example, IoT can measure greenhouse gas emissions and air quality, contributing to the development of smart and sustainable cities.
These applications not only optimize processes and reduce costs but also create more comfortable living and working environments while supporting the development of future smart cities.
3.3. Virtual Reality (VR)
Currently, various technologies such as virtual reality (VR), augmented reality (AR), artificial intelligence (AI), and fintech have been integrated into transaction processes, creating more intuitive and convenient experiences for users (Yen Chi, 2021).
According to a report by batdongsan.com.vn, Vietnamese consumers increasingly favor online transactions, as evidenced by the rising rates of online searches, negotiations, and contract signings. This indicates that the application of digital transformation technology is essential for real estate companies in the current context.
Among the standout technologies, VR technology offers significant benefits and can be considered one of the highly effective tools, allowing users to “tou” homes or projects realistically and vividly from their own homes. VR and AR technologies have been implemented in several sales events by project developers. For instance, virtual tours help simulate the model home viewing process. Additionally, some organizations have applied it to interior design, creating lively perspective models before construction.
Goldman-Sachs forecasts that by 2025, the number of real estate brokers using VR and AR technology will increase significantly, with an estimated 1.4 million real estate brokers using these technologies.
3.4. Blockchain
Another technology that is gaining widespread recognition in Vietnam is Blockchain, which can be considered as revolutionizing real estate transactions. Blockchain provides the real estate industry with a reliable means to seamlessly track and trace processes.
With its transparency, security, and automation features, blockchain effectively addresses the complexities of traditional transactions, making transactions faster and easier. This field has considered the application of blockchain for registering, managing, and transferring ownership (Crosby et al., 2016; Swan, 2015).
Smart contracts automate processes from ownership search to payment, while blockchain provides an immutable ledger, ensuring transparency and eliminating fraud risks. As a result, both buyers and sellers can trust the legality and security of the transaction process.
Real estate transactions through Blockchain can be divided into two main stages:
– Stage 1 – Transfer and Storage of Real Estate Value: In this stage, Blockchain will perform electronic identification by encrypting information about the asset, including legal documents, detailed information, and the current status of the asset. This information will be stored on the network, creating an accurate virtual record of the asset.
– Stage 2 – Conducting Value Exchange Transactions: After the asset has been encrypted and recorded on the platform, buying and selling activities are conducted based on the identified information. Blockchain allows an asset to be divided into many small parts, making investment more accessible. This is particularly useful for investors who wish to enter the real estate market but lack the financial capacity to buy the entire asset. Additionally, this division helps large investors manage risks by not concentrating all capital on a single deal.
Overall, this technology can streamline and refine the real estate transaction process. The increasing influence of blockchain over time is bringing positive benefits to transactions in this sector. Specifically, buyers can quickly look up past transaction information and ownership of the asset, while sellers benefit from a directly managed and efficient sales process.
However, users need to pay attention to the essential means of implementing blockchain in real estate transactions and carefully consider these service supply systems to make accurate and optimal choices.
3.5. Big Data
Finally, Big Data, often referred to as the “oil” of the digital age, is being harnessed and refined through artificial intelligence (AI) to create significant value for the real estate industry. Benefits include personalizing user experiences, providing property price data, identifying prospective customer groups, and more.
This process involves three main stages:
- Aggregating and synchronizing data from various sources (transactions, customers, markets, social networks, etc.);
- Processing raw data using AI (creating a data platform, evaluating and forecasting to extract valuable information); and
- Applying the extracted information to create beneficial functions for users, such as smart real estate searches, accurate valuations, investment advisory, and more.
More specifically, in the real estate sector, Big Data applications include the following key points:
– Providing accurate and secure information: Big Data helps update and supply necessary information to customers, making it easier for them to access companies and expanding cooperation, investment, and market transaction potential.
– Supporting investment and development decisions: Based on data collected from Big Data, businesses can make informed decisions regarding construction, investment, and project development, optimizing business opportunities.
– Continuous upgrades: By analyzing and upgrading new features of Big Data, companies can build a more efficient and swift investment cooperation environment.
– Marketing and promotion: Big Data helps develop timely and accurate marketing and project communication plans based on real-time data.
– Capturing consumer needs: Using Big Data allows businesses to integrate surveys and real-life analyses to understand customer requirements. This helps businesses formulate development strategies aligned with their objectives.
V. Conclusion
The Vietnamese real estate market in 2024 has shown signs of recovery and positive development after the impact of COVID-19. This progress results from the State’s implementation of new laws and various supportive policies for market participants.
However, to maintain and promote the stability and sustainability of the real estate market, the State still needs to address existing inadequacies in the legal framework, credit and loan systems, and to integrate research achievements and modern technologies to enhance management capabilities and prevent market transaction transparency issues.
Although the Law on Land, the Law on Real Estate Business 2024, and the Law on Housing 2023 have been significantly supplemented and improved compared to previous laws, meeting many urgent needs of the real estate market, their dissemination and implementation are still required.
During implementation, guidance is needed to ensure clear and effective regulations. Support policies must also be timely and appropriate, creating favorable conditions for investors and businesses to further boost the real estate market.
State inspection and monitoring procedures must also be stricter to prevent and address legal violations, fraud in investment, and real estate transactions, and to avoid the long-standing issue of speculation and price inflation.
Alongside the completion of legal codes, the application of advanced technologies in real estate management is also essential. Technologies like Proptech and Blockchain will be powerful tools in effectively managing and utilizing real estate resources.
Through such efforts, the Vietnamese real estate market can develop more robustly and sustainably, making Vietnam a safe and reliable investment destination for economic organizations worldwide.
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