VIETNAM REAL ESTATE MARKET: LACK OF ACCURATE INFORMATION, TRANSPARENCY

Vietnam's real estate market is now intransparent in planning, investor selection, project assignment and transactions. Limited information on the market and inaccuracy are causing certain difficulties for real estate investment activities.

Lack of transparent information

In a recent meeting with the representative of the World Bank, Mr. Nguyen Tran Nam, Chairman of Vietnam Real Estate Association, said: “Very little and inaccurate information is one weakness of the Vietnamese real estate market. Although the database can be collected from the government and the Association and this is defined in the Housing Law and the Real Estate Business Law, it is still very poorly implemented in reality.”

According to the 'Global Real Estate Transparency Index 2018' of Jones Lang LaSalle (JLL), Vietnam's real estate market is ranked 61 out of 100 global real estate markets in terms of transparency, leading the "Poor transparency" group.

Besides, the statistics of the Ministry of Construction shows that Vietnam currently has no synchronous statistics system of real estate ownership and transactions to meet the needs of the State management from Central to local authorities as well as quickly and accurately provide market movements and prices so that people and real estate brokers can determine the right investment direction. Meanwhile, the most regular quarterly and annual reports still come from foreign real estate companies doing business in Vietnam. However, this information is difficult to verify and is often local, oriented to the interests of the business, and not objective and comprehensive.

Because of this lack of transparent information, consumers are required to consult different sources to avoid falling into a real estate investment trap. The Real Estate Business Law requires the investor to disclose the real estate project information on the business website including the detailed plan of the project, the number of houses/apartments for sale, and the number of remaining units. But in fact, the investors do not perform it properly but mainly post information and polish products to sell as many properties as possible. The lack of transparent information caused a virtual fever of land prices and complicated developments in the real estate market recently. Brokers, storks and even some real estate businesses can take advantage of ignorance or lack of customer information to push prices up.

Many agricultural land, rubber land and lands not planned to be residential land have been illegally divided into land plots for sale, cheating many people, causing great damage and disruption in the local development planning, disrupting the real estate market, and creating obstacles in attracting large and feasible investment projects.

Prerequisites for the development of the real estate market

Currently, with the deep integration into international and regional economies, Vietnam is expected to increase the attraction of foreign direct investment (FDI), including FDI into the real estate. Besides the favorable investment environment, and the stable political situation, it is extremely important to provide complete and transparent information. Foreign investors pay more attention to the benefits they earn from investing in Vietnam's real estate market and other countries in the region such as Indonesia, Singapore, Malaysia, etc. One weakness of the real estate market of Vietnam is not transparent, which will hinder the investment process of foreign investors into the market. Therefore, the information must be transparent to attract more investment from foreign investors, as well as create trust of consumers and investors.

Currently, the Department of Housing and Real Estate Market Management (Ministry of Construction) is also actively coordinating with the Vietnam Real Estate Association to publish the real estate statistics in the six provinces and cities, including Hanoi, Ho Chi Minh City, Da Nang, Hai Phong, Khanh Hoa and Can Tho. The six provinces and cities account for 80-90% of the transactions in the country. Accordingly, the State will provide the number of licensed projects to forecast the short-term supply and demand published quarterly.

This project is expected to become an official information channel to meet the requirements of the government in the management, helping businesses in strategic planning as well as guiding people to make the correct purchasing decisions. More specifically, projects provide the press accurate information on the media to stabilize the market.

“The clearer and more transparent the information is, the more stable and sustainable is market development. This requires the coordination between the management unit with non-governmental organizations and the Association to be able to implement the project early and successfully,”said Mr. Do Viet Chien, General Secretary of Vietnam Real Estate Association.

Source: VCCI