Greener investment streams to propel real estate sector

How do you assess the potential of the green real estate bond market in Vietnam today?

We believe that the potential of Vietnam’s green real estate bond market is considerable. A prime example is the rapid increase in the number of buildings obtaining green certification in recent years.

According to reports from the EDGE Certification Programme and the International Finance Corporation, by the end of 2024, Vietnam had around 560 certified green buildings, far exceeding the government’s initial targets set for the 2019-2030 period. The number of newly issued certificates in 2024 doubled compared to the previous year, signalling that businesses are now prepared to access green funding both domestically and internationally.

We anticipate that, as the supply of new housing improves and buyer sentiment turns more positive, the acceleration of new developments will prompt real estate companies to diversify their funding sources.

What role does the promotion of green bonds play in driving real estate projects towards a green transition?

The rise of green bonds is establishing a new green standard in the real estate sector, which has remained relatively unchanged for many years. This trend is also encouraging Vietnamese real estate firms to pursue green transformation, enabling them to access preferential financing for project execution.

The growth of green bonds offers investors and banks a wider range of financing options for real estate ventures. These schemes not only pose lower environmental risks but also drive financial institutions to integrate environmental criteria into their evaluation and selection processes.

Furthermore, under the State Bank of Vietnam’s green credit market strategy, numerous banks have already rolled out green credit and green funding packages, providing strong momentum for the growth of green real estate.

What are the key factors driving the development of the green real estate bond market in Vietnam?

As the 2050 net-zero target approaches, government regulatory support is the key driver for the development of Vietnam’s green real estate market. Recent policies such as the National Programme on Energy Efficiency and Conservation, the National Green Growth Strategy, and the Law on Environmental Protection have increasingly emphasised green bonds, green standards, and sector-specific incentives for real estate and green buildings.

Particularly in 2025, the introduction of the Green Industry Classification Framework will provide a clearer distinction between green buildings and conventional developments, forming a foundation for green bond issuance in the domestic market.

How should stakeholders, including issuers, investors, the government, and financial institutions, collaborate to ensure the sustainable and effective development of the green real estate bond market?

For Vietnam’s green real estate bond market to develop sustainably and effectively, there are three key lessons from regional experiences suitable, which cover standardisation, policy support, and capacity improvement for market participants.

Firstly, the widespread adoption of common issuance and disclosure standards will familiarise the market with stricter regulations and enhance confidence in the quality of sustainable bond issuances. Vietnam’s forthcoming green taxonomy will provide guidelines to align all stakeholders on definitions and best practices in the sustainable finance market. Additionally, maintaining alignment with international principles will help attract foreign investment into Vietnam’s sustainable financial sector.

Secondly, government policies and support measures will be a crucial catalyst for industries and businesses to adopt lower-carbon business models. Incentives that help issuers offset a portion of the costs associated with green bond issuance and independent assessments will also contribute to the market’s expansion.

Finally, the development of a well-integrated ecosystem with close collaboration among international organisations, advisory bodies, and service providers will be essential. This will facilitate knowledge sharing, the establishment of best market practices, the resolution of domestic market bottlenecks, and the creation of a robust foundation for sustainable finance to flourish.

Stakeholders highlighted the need for green capital and identified key issues for expanding green credit and finance at a seminar last week.

With billions of US dollars poised to invest in green industrial real estate projects, Vietnam has a significant opportunity to stand out and attract these green capital flows.