Unlock Industrial Real Estate Potential with the Amended Land Law 2024

The year 2024 marks an important legal milestone related to real estate when three laws related to the real estate market, namely the Land Law, the Housing Law, and the Real Estate Business Law, officially come into effect.

The 2024 Amended Land Law is built on the political basis of Resolution No. 18-NQ/TW, which outlines the primary goals for amending Land Law: Land resources must be managed, exploited, and used to ensure the greatest savings, sustainability, and efficiency; generate momentum for Vietnam to transition to a developed, high-income nation; land management and use must ensure fairness and social stability; maintain a balance among the interests of investors, land users, and the state.

From August 1, the 2024 Amended Land Law has come into effect with numerous modifications that are supposed to enable the real estate market to thrive while resolving present issues in the sector, thereby creating room for the growth of the economy in general.

New provisions on land use regulations in industrial parks in the Amended Land Law 2024:

• In the past, foreign enterprises wishing to engage in real estate development had to form joint ventures with domestic enterprises to carry out the project. However, under the updated Land Law, economic entities that have received foreign investment capital are permitted to directly receive transfers of real estate projects, sublease land use rights in high-tech and industrial parks, and are encouraged to invest in infrastructure in high-tech parks for the advancement of science and technology … according to the provisions of the law on real estate business.

• Article 60 of the 2024 Amended Land Law allows land use plans to be made simultaneously, but higher-level plans must be approved before lower-level plans; If the appropriate authority has not approved the new plans at the end of the land use planning period, the old plans may still be implemented until the State approves the new plans.

• According Clause 3, Article 202 of the 2024 Amended Land Law, investors who have leased land from the State to invest in the construction and operation of industrial parks and industrial cluster infrastructure in the form of annual land rental payments are entitled to switch to the form of land rental payment at one time for the entire rental period for all or part of the business land area.

• The 2024 Amended Land Law narrows the case of land leases with one-time payments by encouraging land leases with annual payments for production and commercial ventures.

• The 2024 Amended Land Law also includes a new progressive point that encourages and motivates the growth of SMEs, new businesses joining the market, creative enterprises, and businesses that operate with more professional capability than financial resources. Clause 6, Article 202 clearly states: “Investors are responsible for reserving land funds with invested infrastructure for lease to SMEs and facilities relocated due to environmental pollution. The State has a policy to reduce land leasing prices in industrial parks and industrial clusters for the cases specified in this clause. The reduced land rental fee will be refunded to the investor by deducting it from the land rental fee that the investor was required to pay under the regulations regarding land rental collection.

• According to Clause 7, Article 202 of the 2024 Amended Land Law, the land area for building housing for workers in industrial parks according to the planning shall be managed as commercial and service land and enjoy incentives according to the provisions of law.

The real estate sector has a significant effect on the Vietnamese economy. Promoting sustainable real estate development and efficient land use are considered to be the keys to luring in significant investment capital sources, especially capital from foreign investors for economic growth. Every significant law amendment drove the Vietnamese real estate market into a new phase of growth. It is anticipated that the 2024 amended Land Law may render lands an “endogenous resource” to support economic expansion and open up significant prospects for the growth of the real estate sector, particularly industrial real estate.

Though the global economy is slowing down, foreign investment in Vietnam’s real estate is projected to increase significantly in 2024. Registered FDI capital in the real estate industry climbed by 89.1% in the last 11 months, to reach around USD 5.63 billion.

Source: dangcongsan.vn, tapchicongthuong.vn, tapchitaichinh.vn

Some new points and outstanding new policies in the Land Law 2024 : https://sitelocationadviser.com/2024/01/21/vietnam-passed-new-land-law/