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The introduction of the Land Law 2024 has profoundly reshaped Vietnam’s real estate sector, bringing a variety of challenges and opportunities for international investors. This article provides a concise overview of the key elements of the law and explores its impact on the real estate market, emphasizing increased transparency and accountability in land allocation. Aimed specifically at foreign investors, we offer insights and guidance for navigating the regulatory landscape and taking advantage of the expanding opportunities in Vietnam’s vibrant real estate market in 2024. 

I. Land Law 2024: Enhancing Agricultural Efficiency and Transparency 

The Land Law 2024 implements numerous essential measures designed to enhance the efficiency of agricultural land use, ensure transparency in land reclamation for socio-economic development, and improve the accuracy of land valuation methods. 

a.   8 Key Provisions of the Land Law 2024 and Their Implications for Land Users and Investors 

1. Restricting Agricultural Land Transfers to Foster Growth 

The Land Law 2024 imposes restrictions on the transfer of agricultural land usage rights, capping it at 15 times an individual’s allocation limit, with the goal of advancing agricultural sector growth and rural prosperity. This measure, in turn, yields positive impacts on both the economy and the real estate market. 

2. Enhanced Transparency in State Land Reclamation 

The law specifies 31 specific cases for State land reclamation, ensuring transparency and averting the recurrence of widespread land acquisition issues observed in the past. 

 3. Aligning Land Prices with Market Values 

By removing land price frameworks and adjusting prices periodically based on market values instead of an annual list, the legislation aligns land prices with current market rates, though it adds administrative burdens on local authorities. 

 4. Emphasizing Land Fund Development and Management 

The inclusion of Chapter VIII underscores the importance of land fund development, management, and exploitation, emphasizing adherence to comprehensive land use planning and transparency principles. 

5. Compensation and Resettlement Obligations for Investors 

The regulations concerning land allocation and leasing, whether through auctions or selection bidding, mandate winning investors to undertake compensation and resettlement obligations within stipulated timelines. 

6. Liberalizing Land Usage for Socio-Economic Projects 

The liberalization of land usage for socio-economic projects, including the establishment of industrial parks, economic zones, and social housing projects, fosters diverse developments. 

7. Increased Flexibility in Land Rent Payments 

Under the new law, land users enjoy increased flexibility in selecting their preferred payment methods for land rent, allowing for either annual payments or a one-time payment for the entire lease duration. 

8. Immediate Implementation of Key Regulations 

 The Land Law 2024 immediately applies certain regulations, especially on land valuation, addressing issues like sea reclamation and land violations. This proactive approach benefits investors by providing clearer regulations and simplifying the investment decision-making process.

b. Amendments to land rights and allocation

 During its 5th extraordinary session on January 18, 2024, the 15th National Assembly (NA) formally ratified the 2024 version of Vietnam’s Land Law. 

 The Land Law of Vietnam for the year 2024 is scheduled to come into force on January 1, 2025, replacing its predecessor, the 2013 edition, known as Land Law No. 45/2013/QH13. However, certain exemptions to this transition exist, encompassing the following provisions: 

  • Article 190: Guidelines relating to maritime encroachment activities, slated to take effect in April 2024. 
  • Article 248: Directives amending various sections of the Law on Forestry, also expected to be enforced in April 2024. 
  • Article 60.9: Guidelines concerning the development and endorsement of land use planning, set to be effective upon the expiration of Resolution No. 61/2022/QH15 passed by the National Assembly on June 16, 2022. 

The amended land law introduces major changes to land valuation and pricing in Vietnam. Provincial People’s Committees will now propose annual adjustments to ensure valuations reflect current market trends. 

The law also updates the land valuation methods from Decree 44/2014/ND-CP. It reduces the number of methods from five to four and provides clear guidelines on when to use each method, aiming to improve transparency and consistency in land valuation nationwide. 

II. Impact on the Vietnam Estate Market  

Vietnam’s amended Land Law, along with related legislative changes, is set to significantly impact the real estate sector. Stakeholders foresee positive effects, envisioning a healthier and more sustainable market. The law addresses critical issues such as land management efficiency, transparency, and fair access. Key changes include streamlining land recovery procedures and enhancing state management effectiveness.

a. Challenges and Future Refinements

Despite these improvements, challenges remain, highlighting the need for further refinement. The amended Land Law marks a transformative phase for Vietnam’s real estate landscape, necessitating continued collaboration and refinement to achieve its objectives.

b. Implications for Urban Development and Infrastructure Projects

  • Enhanced Transparency and Flexibility 

Vietnam’s amended Land Law impacts urban development and infrastructure projects by transitioning to an annual land price evaluation system for greater market transparency and allowing more flexible land use classifications, subject to government approval. 

  • Financial Relief and Market Competitiveness 

Switching to annual land rent payments offers investors financial relief and a sustainable expenditure model, while auctioning land leases boosts market competitiveness and transparency. 

  • Easing Land Use for Foreign-Invested Projects 

Revised definitions expand regulations for Foreign Economic Organizations, easing land use for foreign-invested projects. 

III. Essential Updates for Foreign Investors in Vietnam’s Real Estate Market 

a. Changes in Foreign Ownership Restrictions and Legal Framework 

The newly amended Land Law in Vietnam introduces significant changes for foreign investors in the country’s real estate sector. 

  • Refined Definition of Foreign Invested Enterprises (FIEs) 

One of the notable updates is the refined definition of Foreign Invested Enterprises (FIEs), now aligned with the criteria outlined in the Investment Law. 

  • Broader Latitude for FIE Developers 

The law grants FIE developers broader latitude, allowing them to venture into developing infrastructure for sale or lease. 

  • Clarity on Land Acquisition Rights 

The law clarifies the rights of FIEs to acquire land in industrial parks and real estate projects allocated by the government. 

  • Navigating the Regulatory Landscape 

Foreign investors must remain vigilant and adaptable to navigate this evolving regulatory landscape. Keeping abreast of forthcoming decrees from the Ministry of Natural Resources and Environment (MONRE) will be crucial. 

  • Fostering an Investor-Friendly Environment 

These changes reflect Vietnam’s efforts to create an investor-friendly, transparent, and fair environment. Foreign investors should stay agile to seize new opportunities in the dynamic real estate market. 

 b. New rules and best practices: 

vietnam land law 2024, vietnam real estate market

IV. Challenges and Future outlook and for Vietnam Real Estate Market under the Land Law 2024  

  • While there’s an expectation for an increase in apartment supply, there’s also a forecasted increase in selling prices due to the gap between supply and demand. Additionally, social housing supply is expected to increase significantly in 2024. Also because, land users are given the flexibility to choose between annual or one-time land rent payments, providing convenience and adaptability to their financial situations. Despite an increase in apartment supply, the gap between supply and demand is expected to drive up selling prices, while significant growth in social housing supply and flexible land rent payment options enhance convenience and adaptability for land users.
  • Challenges for the real estate market in 2024 include slower-than-expected recovery of consumer demand, large values of mature bonds, difficulty in implementing real estate projects in some localities, and issues with access to capital for businesses. While the market shows potential for recovery, these challenges highlight the need for cautious optimism and strategic planning by investors to navigate financial pressures and regional implementation difficulties effectively.

Final thoughts 

Vietnam’s 2024 Land Law overhaul promises both opportunities and hurdles for foreign investors, focusing on agricultural land utilisation, transparent allocation, and pricing regulation. The amendments will notably impact land valuation and pricing in the real estate sector. Annual land valuation aims for transparency, while annual rent adjustments offer financial flexibility. Foreign investors gain expanded rights and clearer definitions, benefiting from preferential treatment in land acquisition. 

Fluctuations in land prices may affect project costs, demanding cautious navigation of evolving regulations. These changes underscore Vietnam’s commitment to investor-friendly policies, addressing market dynamics and signalling potential growth and stability. 

At Source Of Asia, we support you through your project in Asia. Our Market Expansion is here to design and implement tailored growth strategies. Our local team has developed a wide business network, tools, and methodology to ensure your market expansion according to your wishes and local regulations.