RESOLVING STAGNANT PROJECTS: WHEN LEGAL STATUS IS NO LONGER THE ONLY BOTTLENECK

RESOLVING STAGNANT PROJECTS WHEN LEGAL STATUS IS NO LONGER THE ONLY BOTTLENECK

The nationwide campaign to review and resolve bottlenecks for stalled projects has recently reached a record milestone, with over 3,400 projects classified and processed, unlocking an estimated asset value exceeding VND 2.5 million billion. However, administrative and legal untying does not equate to an immediate boom in actual market supply. For property developers, a more practical challenge is unfolding: restructuring cash flows, controlling accumulated costs, and repositioning products to meet buyer absorption capacity.

1. The Bigger Picture: A Broad-Based Cleanup and Transition

The real estate market has recently witnessed a clear shift in the way state management agencies address difficulties: moving from case-by-case, reactive handling based on individual petitions to a more centralized, digitalized, and categorized approach.

Specialized databases, notably the nationwide System 751 and System 45 in Ho Chi Minh City, have helped accurately identify the specific “bottlenecks” of individual projects. From interspersed public land and difficulties in determining land-use fees, to adjustments to 1/2,000 zoning plans and projects subject to prolonged inspection conclusions, all have been incorporated into a closely managed, systematic, and structured review process.

At the focal point of the southern market, Ho Chi Minh City has classified thousands of stalled projects into several groups: those falling under the authority of departments and agencies; those under the authority of the municipal People’s Committee; and those requiring recommendations to central government agencies for resolution through special mechanisms such as Resolution 21 or amendments to the new land-law framework. Initial signs of progress in removing these obstacles are becoming increasingly clear, but actual effectiveness will depend on the ability of the project developers themselves to “absorb” and act upon the legal solutions.

2. Notable Figures

• 4,685 projects: The total number of difficult and long-stalled projects nationwide that had been registered and placed under monitoring on the Ministry of Finance’s System 751 as of mid-September.
• 3,407 projects (~72.7%): The number of projects for which difficulties have been classified and addressed.
• More than VND 2.5 quadrillion: The estimated total investment capital whose capital constraints have been alleviated following the nationwide resolution efforts.
• 650 projects: The total number of long-stalled projects in Ho Chi Minh City that have been resolved across various review phases. Prior to Resolution 29/2026/QH16, Ho Chi Minh City had addressed 417 projects under Plan No. 34/KH-UBND. Subsequently, the Department of Finance compiled a list of 921 projects under Directive No. 45/CT-UBND, comprising 421 transitional projects and 500 new projects. Of these, 233 projects (25.3%) had been completely resolved, while 688 projects (74.7%) still had proposed solutions to be implemented in the coming period.

3. What Is Changing?

The most fundamental change lies not in the number of projects, but in the resolution mechanisms and implementation accountability:

1.      Clearer accountability mechanisms: The establishment of inter-agency steering committees, together with online monitoring systems, helps quantify the progress of dossier processing. Bottlenecks are no longer prolonged through endless exchanges of official documents between departments and agencies.

2.      Standardizing the determination of financial obligations: One of the biggest reasons real estate projects have remained frozen for years is the difficulty in determining land prices and land-use fees. The current resolution process is closely linked to classifying obstacles according to specific valuation bases, creating a legal framework for local authorities to issue decisions on additional land-use fee payments.

3.      Screening the capacity of project developers: Once administrative procedures are cleared, the excuse of “waiting for procedures” is no longer valid. Pressure to implement projects, pay land-use fees, and comply with committed schedules immediately returns to developers.

4. From the Perspective of Project Developers

From the perspective of a project development and investment management company, having a project “unblocked” opens up a series of financial and technical challenges that need to be addressed:

• Finance and Cash Flow: Once the legal framework becomes clear, financial obligations immediately arise, particularly land-use fees calculated based on new land price tables or updated valuation certificates. Developers must prepare a very large amount of actual capital within a short period. Without stable financial leverage or supplementary operating cash flow, a company can easily find itself in a situation where “once the legal bottleneck is removed, the cash-flow bottleneck tightens.”
• Total Investment and Cost Structure: Many projects have been stalled for 5–10 years. Capitalized borrowing costs, opportunity costs, construction material price inflation, and adjusted land prices have pushed actual costs per square meter of saleable area far above the original plan.
• Planning and Product: A project designed between 2015 and 2018 may struggle to meet current market preferences. If the old design is retained, the project may find it difficult to attract customers. If the detailed 1/500 planning is adjusted to upgrade the product, however, the project must enter another legal cycle.
• Market Absorption Capacity: The current market is driven by genuine housing demand and liquidity rather than the speculative sentiment seen previously. Products whose costs have become excessively high due to the burden of accumulated historical costs will face greater caution from buyers.

5. Where Does the Real Concern Lie?

A comparison of data from various reports and actual market developments highlights four key insights:

• Insight 1: The rate of projects “resolved” on paper does not correspond to the rate of actual project relaunches.

Nationwide data shows that 3,407 projects have had their difficulties classified and addressed, but in many cases, the resolution process consists of responding to petitions, identifying implementation directions, or transferring matters to the competent authorities for further resolution. In Ho Chi Minh City, for example, among the 921 projects reviewed under Directive 45, only 233 projects (25.3%) had been substantively resolved, while 688 projects (74.7%) had only reached the stage of having proposed solutions.

(Source: Data reported from the Ministry of Finance’s System 751 and statistics from Tuổi Trẻ and Diễn Đàn Doanh Nghiệp.)

• Insight 2: As the legal “ice block” melts, the “boulder” of land-related financial obligations is exposed.

Previously, legal obstacles allowed many developers to temporarily defer land-use fee payments. Now, as these bottlenecks are removed, land-use fee calculations are being issued based on the new market-based pricing framework. This represents a genuine test of the financial resilience of real estate companies after a prolonged period of liquidity shortages.

(Source: Báo Đấu Thầu and Tuổi Trẻ analyses concerning capital-flow conditions following the resolution of difficulties affecting 650 projects in Ho Chi Minh City.)

• Insight 3: A wave of M&A and secondary restructuring will gain momentum.

After their legal status has been cleared, financially distressed developers often choose M&A solutions — through project transfers — or enter into joint ventures with financial institutions or foreign developers with stronger resources, rather than continuing to implement the projects themselves.

(Source: Capital-flow data involving more than VND 2.5 quadrillion that needs to be put back into circulation, together with the need for new implementation capacity, as reported by Báo Đầu Tư and VTV.)

• Insight 4: Supply is being unlocked, but the supply-demand mismatch will persist

Due to the burden of accumulated costs over years of stagnation—including interest expenses, management costs, and adjusted land prices—most projects after being unlocked cannot be developed as affordable or low-cost housing. Instead, they will have to move toward higher-end segments to compensate for profit margins. The supply-demand mismatch in the market will therefore require a longer period to rebalance.

(Source: Analysis by HoREA and housing-market data reported by Báo Đấu Thầu.)

6. A Long-Term Perspective: Reshaping the Development Cycle

Looking ahead, the campaign to unlock more than 3,400 stalled projects will serve as a catalyst for the market to enter a more transparent and fundamentally driven development cycle:

1.      The end of the era of “holding land and waiting for the right time”: New regulations on recovering land from projects that fail to meet development schedules, together with tighter controls over tax obligations, will make the cost of holding undeveloped projects extremely high. Land will be required to enter the production and business cycle.

2.      Prioritizing operational implementation capacity over the ability to “push projects through”: Going forward, the capabilities of a real estate developer will no longer be measured simply by how many projects it can “secure approval for,” but by its ability to optimize construction costs, manage construction schedules, control risks, and create products that match the market’s affordability.

3.      A shift toward a more sustainable capital structure: Relaunched projects will reduce their dependence on short-term credit or widespread bond issuance. Instead, they will move toward stronger equity structures and transparent cash flows mobilized in line with actual construction progress.

Conclusion

The classification and resolution of more than 3,400 projects and trillions of dong in previously “trapped” capital represent a major turning point in mechanisms and policies. Nevertheless, legal clearance merely unlocks the door to administrative barriers. For a project to truly come back to life and be transformed into a marketable, liquid product, the core challenges remain the developer’s execution capacity, financial strength, and ability to create products that respond to the actual needs of project developers.