VIETNAM’S REAL ESTATE LEGAL FRAMEWORK ENTERS A NEW PHASE: UNLOCKING STALLED ASSETS AND CLOSING GAPS THAT FUEL SPECULATION

1. VIETNAM’S REAL ESTATE MARKET ENTERS A CYCLE OF LEGAL RESTRUCTURING

The market is entering a period of extensive legal restructuring, centered on two parallel objectives: closing loopholes that have contributed to planning-related consequences and unblocking bottlenecks that have tied up social resources. Rather than focusing solely on formally approved development projects, regulators are broadening their oversight to cover a wider range of transactions across the market. This creates a more integrated framework: capital is expected to increasingly flow toward projects with clear and compliant legal status, while stalled projects may have opportunities to be assessed, restructured, and brought back into circulation instead of becoming permanently impaired assets.

2. THREE POLICIES THAT COULD CHANGE THE RULES OF THE REAL ESTATE MARKET

• Bringing off-project land subdivision under greater regulatory oversight: A proposal would bring land plots created through land subdivision and changes in land-use purpose within the regulatory scope of the Law on Real Estate Business, with the aim of curbing speculative land dealing and improving market oversight. (Source: Thanh Nien)

• Addressing stalled projects through resolution and transfer mechanisms: Authorities are studying pilot mechanisms to address, recover, or transfer stalled commercial housing projects in order to unlock land resources and restore housing supply, subject to independent valuation and compliance with applicable regulations.

• Easing liquidity constraints for housing and construction works that have not yet been issued Certificates: The Ministry of Construction has proposed addressing obstacles related to the transfer of sale and purchase contracts for assets that have already been handed over but have not yet completed the procedures for obtaining a Certificate, thereby supporting liquidity for buyers and projects facing unresolved legal and procedural issues. (Source: Reatimes)

3. HOW ARE THE RULES OF THE REAL ESTATE MARKET CHANGING?

The most significant shift lies in the approach to systemic risk management. Previously, differences in regulatory standards between formal development projects, which were subject to tighter controls, and land freely subdivided outside projects, which faced less stringent oversight, could have encouraged capital to move toward areas with regulatory gaps. The current direction is toward greater consistency in the conditions governing real estate business activities. At the same time, rather than relying solely on administrative measures, proposed mechanisms to improve secondary-market liquidity for assets that have been handed over but have not yet obtained Certificates, together with measures to address stalled projects, indicate a more proactive approach aimed at both managing risks and restoring the circulation of capital and resources.

4. HOW WILL PROPERTY DEVELOPERS BE AFFECTED?

From the perspective of property developers, these developments could have several direct implications:

• Planning and competitive structure: Tighter oversight of large-scale land subdivision and plot sales could significantly constrain spontaneous subdivision activities, creating a more favorable competitive environment for developers with sound legal frameworks, proper planning, and well-developed infrastructure.

• Demand and absorption capacity: Secondary-market liquidity has a direct impact on the pace of primary sales. Buyers may be more willing to commit capital if they have greater certainty that their assets can be legally transferred while they wait for the completion of procedures to obtain Certificates.

• Financing and risk costs: Mechanisms for addressing stalled projects could provide an avenue for developers facing cash-flow disruptions, while also creating important challenges in terms of capital structure. Revaluation of assets could reveal the underlying financial capacity of businesses and influence strategies for acquiring land banks through high financial leverage.

5. WHAT DESERVES THE MOST ATTENTION?

• Secondary-market liquidity could strengthen confidence in the primary market: The Ministry of Construction’s proposal to expand the scope of transferable sale and purchase contracts for housing that has already been handed over but has not yet obtained a Certificate (as reported by Reatimes) is not simply about addressing difficulties faced by end-buyers. From an investment perspective, it could have a significant psychological impact. If the risk of capital being tied up can be reduced through a transparent mechanism for asset transfers, developers may find it easier to attract new capital into projects currently under development.

• Tighter oversight of informal land subdivision could reduce its competitive advantage: According to an analysis by the Ho Chi Minh City Real Estate Association (HoREA), published by Thanh Nien, if legal controls are tightened only within formal project boundaries while land subdivision outside projects remains largely unregulated, speculative capital may shift toward areas with regulatory gaps. The proposal to bring commercially oriented land subdivision activities within the scope of the Law on Real Estate Business could therefore narrow the advantage enjoyed by speculative land operators, who may otherwise face fewer infrastructure, amenity, and legal compliance costs than formal project developers.

• Stalled-project resolution: Lifeline or a rigorous test of developer capability? Proposed mechanisms for addressing stalled commercial housing projects, including a pilot scheme to purchase certain stalled projects (as reported by Hanoi Online), highlight the need to return underutilized land resources to productive use. However, the selection of eligible projects, valuation, and post-acquisition treatment will need to be carefully designed, particularly given the requirement for independent and transparent valuation. For developers, this could become a rigorous test of financial capacity and project viability, reinforcing the need for greater discipline when assessing total investment costs and funding requirements rather than relying excessively on highly leveraged land acquisition strategies.

6. A LONG-TERM PERSPECTIVE

The market is being redesigned to place greater emphasis on use value and execution capacity. Over the coming decade, competitive advantages are likely to lie less in exploiting legal loopholes to subdivide and sell land and more in the hands of businesses with clean land banks, transparent legal status, sufficient financial resources, and proven execution capabilities. As genuine liquidity becomes increasingly important, the ability to complete projects on schedule, control costs, and deliver products that meet genuine housing demand will become key criteria through which the market evaluates and differentiates developers. In other words, the new cycle is likely to favor the ability to create real value rather than advantages derived from regulatory gaps.

CONCLUSION

The series of developments—from narrowing regulatory gaps surrounding off-project land transactions and easing constraints on housing that has not yet obtained Certificates to mechanisms for addressing stalled projects—signals a clearer direction toward a more diversified yet more consistently regulated real estate market.

For developers, the challenge is no longer simply to find ways around regulations, but to build sufficiently robust operating systems that enable them to adapt, remain resilient, and grow on a foundation of real and sustainable value.(Source: hanoionline.vn)