Vietnam State Audit proposes higher equity for real estate developers

The State Audit of Vietnam has proposed increasing equity requirements for real estate developers to help stabilize housing prices. Currently, developers can use commercial credit for 80-85% of project capital, which the State Audit argues increases implementation costs and subsequently drives up home prices. The agency suggested tightening conditions for selecting investors for urban and residential projects, specifically regarding financial capacity and project management.

In response to these suggestions for the draft Law on Real Estate Business, the Ministry of Construction has not yet adopted the proposal, opting to maintain current equity regulations. Under existing laws, developers must hold equity of at least 20% of total investment for projects under 20 hectares, and at least 15% for projects 20 hectares or larger.

Experts note that while increasing equity could reduce developer dependence on loans and improve financial safety, it does not guarantee an automatic reduction in housing prices. Factors such as equity costs, supply, and market absorption must also be considered.