The article provides an overview of the real estate market in Vietnam and points out the current problems of the market, followed by suggested solutions to those problems. Vietnam’s real estate market is a young but fast growing market faced with fundamental problems of a new market such as inefficient legal frameworks, lack of transparency and professionalism, and lack of financing sources. The potential policy solutions to these problems include governmental actions to improve market conditions and attract more foreign funds into the market. We further suggest encouraging strategic alliances between foreign and domestic real estate firms (short-term immediate solution) and real estate securitization (long-term solution).

The relatively young but fast-growing real estate market of Vietnam experienced a boom during 2007 and the first half of 2008. This coincided with Vietnam’s entry into the World Trade Organization. Supply and demand in the four main real estate sectors— condominiums, office rental, hotel and retail—saw strong growth, with prices rocketing to as much as 200% of the level before 2007 (CBRE 2008). The main causes of the boom included a young and wealthier population, massive inflows of foreign capital, and supportive governmental policies. However, the recent economic downturn, high inflation and tightened monetary policy have slowed the market; consequently prices have decreased considerably, while growth in supply, demand and investment has almost halted. Fundamental problems of a younger market have begun to reveal themselves, among which the capital puzzle seems to be the most serious. Indeed, the market has been dependent on very few capital-raising channels, mainly commercial banks, which are providing very limited funds under current conditions. This article aims to provide readers with an overview of Vietnam’s real estate market.