Summary: The real estate market in Vietnam has been continuously and rapidly developing in recent years, becoming a crucial component of Vietnam's economic growth. However, after a period of formation and expansion, the real estate market has revealed various shortcomings in its operational mechanisms, legal systems, participants, commodity structure, transactions, information, and management. It also faces the challenge of balancing economic development with ensuring a sustainable living environment for people. Alongside strategies and policies aimed at improving the material life of citizens, the government is now focusing on techniques and policies to promote stable and sustainable development. The direction of sustainable development in the real estate market is receiving significant attention and emphasis. This article discusses issues related to the growth of the real estate market in Vietnam, with a particular focus on sustainable development.
1. Problem Statement
Over the past two or three decades, the environment has suffered due to the prioritization of economic growth. Since the Industrial Revolution, growth has taken precedence over the environment, leading to various consequences. Common practices include displacing local communities, deforestation for urbanization, and inefficient resource usage. As a result, the world is facing challenges without immediate solutions, such as poor air quality, soil degradation, and climate change. All these factors necessitate sustainable development, as failure to control them could lead to irreversible damage to the environment. Therefore, sustainable development is an essential requirement for countries. The idea of sustainable development affects all aspects of society, including the real estate market.
2. The Concept of "Sustainable Development"
In 1987, the Brundtland Report first used the term "sustainable development" as an alternative to the economic system practiced in most countries worldwide, seeking to meet current needs without compromising the future of future generations. According to the "Brundtland Report" by the United Nations' World Commission on Environment and Development (WCED), sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
The importance of sustainable development includes: (1) Rational use of available resources and aiming to maintain ecological balance; (2) Combating environmental degradation and emphasizing environmental protection; (3) Preventing over-exploitation of resources.
Five years later, the United Nations Conference on Environment and Development held in Rio de Janeiro in June 1992 provided a more detailed definition of this idea and established a detailed action plan, Agenda 21, outlining three areas that global, national, and local governments must implement to achieve sustainable development. The general idea is that each local government can develop its own strategy with the aim of achieving global sustainable development by the year 2000 (the 21st century).
The objectives of sustainable development are:
(1) Economic growth: Aimed at creating a sustainable and well-directed economic development.
(2) Environmental protection: This objective focuses on human contributions to protect and improve the natural environment by reducing pollution and waste, while also aiming to reduce global carbon emissions.
(3) Social inclusion: This objective focuses on providing material foundations for future generations, supporting the creation of healthy, strong, and vibrant global communities.
The principles of sustainable development involve a closely integrated and harmonious combination of three elements: economy, society, and the environment. Specifically:
Social equity: Includes aspects such as education, healthcare, personal safety, and entertainment. The purpose is to maintain social cohesion and relate to respecting the environment and the economic resources of the location.
Economic viability: A production system must meet the needs of society without endangering natural resources and the welfare of future generations. Therefore, its application will be closely related to the needs of the population and the environment.
Environmental protection: To exploit natural resources without depleting them and contribute to their restoration for further use, specific environmental protection measures are necessary. These measures must also take into account the needs of the people and the economic resources of society to which they are applied.
3. Sustainable Real Estate Development
Sustainable real estate development is the practice of incorporating environmentally-friendly design techniques, materials, and technologies into the construction process.
Sustainable real estate encompasses both commercial properties and residential homes designed, built, and operated in a way that minimizes environmental impact. The trend towards sustainability in the real estate industry is driven by several factors, including the increasing global awareness of the need to protect the environment, stricter government regulations, and a desire to save operational costs.
Sustainable real estate is becoming more popular among developers, real estate agents, homebuyers, and tenants. The development of sustainable real estate considers the entire lifecycle of a project, from planning and construction to operation and maintenance.
Some benefits of investing in sustainable real estate are:
1. Lower operating costs: Sustainable buildings are designed to conserve and use resources more efficiently, thereby reducing expenses related to heating, cooling, and overall building operations.
2. Improved resale value: Buildings that meet current sustainable standards and incorporate updated infrastructure and equipment tend to have higher resale values. Specifically, energy-efficient homes are sold at prices around 2.7% higher than non-rated homes.
3. Enhanced reputation: Operating in a sustainable facility helps minimize environmental and social impacts, which boosts a company's reputation and reflects its commitment to the community and the planet. This, in turn, gains trust from stakeholders, strengthens community relations, and attracts new customers.
4. Lower carbon emissions: Every stage of a building's lifecycle, from design and construction to shopping and operations, impacts the environment. Investing in a sustainable building ensures reduced carbon emissions and avoids negative impacts on the environment and the community after completion.
5. Healthier communities: Sustainable buildings contribute to healthier communities through less intrusive and polluting construction methods, the use of fewer hazardous materials, lower maintenance requirements, and the creation of spaces that promote well-being for both humans and the surrounding environment.
6. Strengthened community resilience: Sustainable buildings also support community resilience against the effects of climate change. They respond to local community needs by conserving resources like groundwater and forests, protecting biodiversity and wildlife health, reducing strain on existing utility infrastructure (reducing risks of damage and repairs), providing local revenue (sourcing materials from local businesses), and creating new green jobs (increased demand for developers, builders, policy planners, and agents knowledgeable about sustainability).
4. Sustainable real estate market development policies in Vietnam
Sustainable development trends have been taking place worldwide, and some countries have achieved certain successes. To achieve sustainable results, the role of sustainable development policies is crucial. In recent years, along with commitments to the global community, Vietnam has also recognized that sustainable development positively impacts the overall economy and the real estate market in particular. Vietnam has implemented several policies to promote the sustainable development of the real estate market.
4.1. National Action Plan
Decision No. 622/QD-TTg, issued by the Prime Minister of the Government of Vietnam on May 10, 2017, outlines the National Action Plan for the implementation of the 2030 Agenda for Sustainable Development. This decision serves as Vietnam's legal basis for its commitment to the international community in contributing responsibly to global efforts towards sustainable development.
The Action Plan is considered a crucial tool aimed at achieving balanced economic growth, social inclusion, and environmental protection in Vietnam. It emphasizes the strategic partnership between the German Government and Vietnam, particularly in supporting Vietnam's implementation of the 2030 Agenda within the framework of the Macroeconomic Reform/Green Growth Cooperation Program between Vietnam and Germany and the Paris Agreement on climate change. The Plan sets forth 17 general objectives and 115 specific targets for Vietnam, divided into two implementation phases: 2017-2020 and 2021-2030.
The Plan highlights that sustainable development is essential for the country's development process, involving a close, rational, and harmonious combination of economic, social development, and the preservation of resources and the environment. It aims to proactively respond to climate change, ensure national defense, security, social order, and safeguard the nation's independence and sovereignty. The Plan emphasizes the roles of the Party, the people, various levels of government, ministries, sectors, and localities, along with the integration of science and technology as the driving force for the country's sustainable development.
Currently, to implement the Action Plan for the 2021-2030 phase, the set tasks are to mobilize all resources to achieve sustainable development goals, improve the development of databases to serve sustainable development objectives, develop a high-quality workforce in all fields, strengthen research and application of science and technology, and technology transfer to achieve sustainable development goals, with a particular focus on environmental technology, clean technology, and new energy technology.
4.2. Green Growth Strategy
Green growth is an important aspect of sustainable development. The Prime Minister of the Government approved on September 25, 2012, the issuance of the National Green Growth Strategy.
The strategy clearly defines green growth with the aim of ensuring fast, efficient, and sustainable economic development while playing a significant role in implementing the National Climate Change Strategy.
The objective is to promote green growth, moving towards a low-carbon economy, and making the most of natural resources to become a dominant trend in sustainable economic development. Reducing emissions and enhancing greenhouse gas absorption gradually become mandatory and crucial targets in socio-economic development.
The strategy proposes various solutions related to sustainable development, such as developing green economic sectors, establishing sustainable infrastructure primarily in transportation, energy, water resources, and urban construction, as well as promoting sustainable urbanization.
The development of sustainable cities involves sustainable real estate markets, comprehensive urban planning with a sustainable approach, technical infrastructure applying energy efficiency evaluation systems and green urban infrastructure to increase energy conservation and reduce greenhouse gas emissions, issuing regulations to apply green technology in construction projects, and encouraging investment in and development of green spaces within urban projects,...
4.3. Housing development strategy
On December 22, 2021, the Prime Minister signed Decision 2161/QD-TTg approving the National Housing Development Strategy for the period 2021-2030, with a vision to 2045. The goal is to develop housing that meets the new construction and renovation needs of the people, ensuring quality according to standards and regulations. Deteriorated housing that does not meet quality standards will be renovated or rebuilt. The development of housing should be affordable for different income groups.
In addition, the strategy aims to develop a sustainable and transparent real estate market, regulated and monitored by the State, in accordance with land use planning and housing development strategies, programs, and plans. This includes curbing speculation and wasteful use of land resources in the development of housing.
The strategy sets specific targets for the housing area, improving housing quality, developing commercial and public housing, as well as housing for resettlement purposes. The strategy emphasizes the development of housing closely linked to the real estate market, diversifying housing products (rental, rent-to-own, and for sale), and encouraging investments in modern high-rise condominiums that are environmentally friendly, low-emission, and contribute to improving housing quality. It also aims to ensure connectivity and synchronization with infrastructure systems.
4.4. Green Buildings
Developing green buildings brings significant benefits to the economy, society, and the environment. Many countries around the world have demonstrated that implementing green building development creates substantial value, particularly fostering sustainable development in construction and real estate markets.
While the construction costs of green buildings may be slightly higher than conventional buildings, the value they bring to people's lives is far greater. Living in a green environment with abundant trees, using environmentally-friendly materials and high-efficiency devices enhances human comfort and improves health.
Moreover, energy-saving devices help reduce monthly utility bills while contributing to the conservation of natural resources. In terms of market value, green buildings usually command a price premium of around 4% compared to similar non-green buildings.
Additionally, green buildings have a faster rate of consumption and return on investment. Customers tend to be more satisfied with these products, and the brands of the investors are also enhanced. With the benefits that green buildings bring, it is essential to ensure that they do not have adverse impacts on the environment during the design, construction, and operation phases.
As a result, green buildings utilize resources and energy efficiently, enhancing the quality of life for residents. To achieve green building status, the projects need to meet high technical standards, use sustainable and environmentally-friendly materials, and adopt sustainable architecture, meeting the requirements of standards like LOTUS and LEED.
However, currently, the number of green buildings in Vietnam remains modest and has not yet experienced significant development
5. Conclusion
Developing a sustainable real estate market is an urgent requirement and a mandatory issue that has been incorporated into regulations. Therefore, for the successful development of the real estate market, the government needs to enhance legal policies to encourage and promote the participation of all stakeholders. Particularly, real estate enterprises must play a vital role in ensuring a well-developed, sustainable market that generates significant economic value. Specifically, this involves the responsibility of real estate businesses towards consumers and fostering agreement and close cooperation among all relevant parties.
In addition to diversifying sustainable real estate types, developing a green capital market is also a necessary financial solution to support the goal of green growth and sustainable development.
Source: Industry and Trade Magazine.