Green real estate investment situation in Vietnam
Environmentally friendly, energy-saving and health-assuring buildings for users are not only a consumer demand but also a part of a modern urban development strategy.
According to the Vietnam Green Building Market Overview Report for 2024 published by the Edge certification system and the International Finance Corporation IFC, Vietnam currently has 559 green-certified projects with more than 13.6 million m2 of construction floor area that have achieved green project certification according to popular certificates such as EDGE, LEED, and Green Mark. Some pioneering investors have chosen to develop high-end office and apartment projects in the direction of saving energy, reducing emissions and using resources effectively.
However, compared to the total real estate supply in the market, the proportion of green certified projects is still modest. Most markets still prioritize the initial investment cost problem rather than long-term operating and use value. This shows that, in addition to the clear improvement in awareness, the Vietnamese real estate market is still in the process of transforming investment and consumption behavior towards sustainability.
Although there are many challenges ahead, especially in balancing initial costs and long-term efficiency, the trend of choosing green projects is increasingly attracting the attention of real estate developers and consumers - opening up many potentials for a green, sustainable development market in the near future
Challenges in accessing green project development capital
One of the barriers for investors when they want to develop green projects is that the initial cost is higher than that of normal projects. This comes from the requirements for higher technical design, environmentally friendly construction materials, as well as energy, water and waste treatment technology systems.
In that context, green credit has become an important "connector" to support investors in developing green projects as expected. Green credit is
Credit support for manufacturing and business enterprises with the purpose of environmental protection as well as common ecosystems. This is the financial amount for sustainable development and undeniable the important role of the banking system in general and commercial banks in particular in investing in green credit. In the world, green credit is a very popular strategy and is increasingly applied by credit institutions. Currently, countries around the world use many policies to encourage green credit.
In Vietnam, the banking industry has actively implemented the goals in the National Strategy on Green Growth in recent times, with many remarkable results. Commercial banks have initially implemented many specific activities such as building processes and implementing preferential loan packages for businesses with green projects.
However, developing green credit in Vietnam still faces some limitations such as: No national green classification portfolio as a basis for effective credit allocation and mobilization of green investment capital; Some credit institutions still lack internal policies and specialized departments on environmental risk management; Green projects often have long capital recovery time and high costs, while lacking a mechanism to support preferential long-term capital sources.
Due to existing problems, not all investors can easily access green credit capital. In fact, most commercial banks in Vietnam are still continuing to research to develop and apply clear criteria to classify and evaluate green projects. Some major financial institutions have begun to offer preferential credit products for projects that meet environmental criteria.
Present in green project lending activities
A current problem is the lack of a clear set of national criteria to evaluate a project considered "green". This has not facilitated investors in orienting design and construction, as well as banks in the process of appraisal and disbursement of preferential loans. The application of international standard systems such as LEED or EDGE is necessary, but still needs to be adjusted to suit Vietnam's climate conditions, materials and construction capacity.
To encourage the development of green real estate, a comprehensive support ecosystem is necessary.
First of all, there needs to be a national set of criteria for green projects, issued by state agencies to suit the characteristics of the Vietnamese market. This is a platform to help synchronize policies from design, licensing, to credit access. In particular, it is possible to consider the policy of prioritizing quick licensing for projects with sustainable green elements.
Second, it is necessary to establish supporting financial mechanisms such as the National Green Investment Fund, providing preferential loans or credit guarantees for projects that meet green criteria.
Commercial banks need to be encouraged and technically supported to build green credit products, along with a clear assessment standards framework.
Third, strengthen the role of communication to raise people's awareness of the long-term benefits of green projects. When consumers start to focus on sustainability, the market will create reverse pressure, forcing investors to change their strategies.
It can be seen that green real estate is not only a trend of the future but is gradually becoming a mandatory requirement of the present. Vietnam is making positive progress in approaching and developing this field.
