Green Credit and Opportunities for Vietnam’s Real Estate Market

Sustainable finance is playing an increasingly important role in shaping investment and development decisions across Viet Nam. Among the available financing mechanisms, green credit has emerged as a key tool for supporting projects that deliver environmental and long-term economic benefits. As sustainability standards become more important to investors, occupiers and regulators, green credit is creating new opportunities for the country's real estate sector, particularly for developments that prioritise resource efficiency, environmental performance and sustainable urban growth. 

This article explains the concept of green credit, outlines the current policy framework in Viet Nam and examines its implications, opportunities and challenges for the real estate market. 

Table of Contents 1. What Is Green Credit: Differences from Traditional Credit 2. Policy Framework and Green Credit Orientations 3. Current Status of Green Credit Implementation in Real Estate 3.1 Pioneer Banks in Green Credit Deployment 3.2 Specific Credit Policies for Real Estate 4. Green Credit Opportunities and Challenges 4.1 Opportunities for Real Estate Developers 4.2 Challenges and Obstacles 5. Conclusion

1. What Is Green Credit: Differences from Traditional Credit      

Green credit was formally introduced under Viet Nam's Law on Environmental Protection in 2020 (Law No. 72/2020/QH14), and is defined as financing provided to projects that support sustainable development objectives. This includes but is not limited to resource efficiency, environmental protection and improved living environments. Priority sectors include renewable energy, green technology, resource management and real estate developments that meet recognised green building standards. 

Unlike conventional lending, which primarily assesses repayment capacity, financial performance and collateral, green credit also considers environmental, social and governance (ESG) factors. Financial institutions typically evaluate areas such as energy efficiency, resource consumption, environmental impact and long-term sustainability performance when reviewing eligible projects. 

For real estate developers, access to green credit can support the delivery of higher-quality, more sustainable projects while potentially reducing long-term operating costs. For lenders, incorporating ESG considerations into credit assessments can improve risk management and support the transition towards a more transparent and sustainable real estate market. 

2. Legal Regulations for Vietnamese Buyers

Recognising the strategic importance of high-quality growth models, the State Bank of Vietnam (SBV) issued early directional mandates to encourage “greenification” of capital flows. The regulatory structure spans from primary legislation to sector-specific guidelines, establishing a solid legal foundation for concessional capital:  

• Law on Environmental Protection 2020 (Article 149): Stipulates clear incentive mechanisms for credit institutions to grant green credit and apply preferential capital and interest rate policies to projects meeting sustainability criteria.  
• Decree No. 08/2022/ND-CP (Article 154): Details mechanisms for interest rate support and loan incentives for developers executing qualified sustainable projects.  
• Circular No. 17/2022/TT-NHNN: Mandates financial institutions to manage environmental risks in credit extension activities for eligible project portfolios.  
• Directive No. 03/CT-NHNN and Decision No. 1604/QD-NHNN: Sets into motion the Green Bank Development Scheme, driving green credit balance growth and encouraging preferential credit packages tailored for infrastructure and real estate.  

Green credit policy directions focus on establishing a favourable legal environment for capital to flow robustly into key economic sectors. 

A foundational milestone was the Prime Minister's issuance of Decision No. 21/2025/QD-TTg, dated 4 July 2025, detailing environmental criteria and confirmation mechanisms for investment projects under the National Green Classification Taxonomy. This taxonomy acts as a standardised technical benchmark, offering a critical legal basis for the SBV and related ministries to issue detailed operational guidelines for banking, finance, and real estate. Consequently, credit institutions can systematically identify, underwrite, and quantify project sustainability, eliminating verification bottlenecks and building solid trust among international financial funds and investors. 

3.  Current Status of Green Credit Implementation in Real Estate 

Viet Nam’s financial market has recorded positive momentum as numerous banks actively expand green credit facilities for real estate developments. This shift is occurring across state-owned commercial banks, joint-stock commercial banks, and foreign financial institutions operating in the country.  

3.1 Pioneer Banks in Green Credit Deployment 

State-owned commercial banks serve a core role in guiding market direction and steering green capital flows.  

Prominent active financial institutions include TPBank, BIDV, Vietcombank, MB Bank, Agribank, VPBank, Sacombank, and ACB.  

Additionally, strategic partnerships between major domestic banks and international financial institutions (HSBC, SMBC, and MUFG) enhance connectivity with global concessional capital pools. This supports domestic enterprises in accessing green financing at competitive capital costs and flexible loan tenors. 

The continuous deployment of practical financing packages and high credit growth by pioneer banks has fostered a diversified capital market, meeting the certified construction funding needs of both project developers and homebuyers. 

3.2 Specific Credit Policies for Real Estate 

Under Article 149 of the Law on Environmental Protection 2020, green credit flows target real estate projects demonstrating resource efficiency, climate change resilience, wastewater management, rooftop solar integration, and smart urban operation models. Investing in properties with recognised international certifications (i.e. LEED, EDGE, or LOTUS) satisfies environmental metrics while helping developers stay ahead of evolving ESG frameworks and circular economy policies.  

Through mechanisms such as preferential risk-weighting treatment and refinancing support, certified green projects may gain access to more competitive financing terms, including lower borrowing costs, longer loan tenors and more streamlined approval processes. Beyond development financing, banks are increasingly introducing green mortgage products for buyers of certified developments, supporting demand across the residential market. Green certification and transparent ESG reporting can also strengthen a project's appeal to institutional investors and international capital providers. 

Green-certified developments can help reduce operating costs, support asset performance and enhance long-term competitiveness. These factors are increasingly important as investors and occupiers place greater emphasis on sustainability credentials and environmental performance. 

As a bridge between developers and capital sources, Savills Investment Advisory supports clients across the investment lifecycle, including capital structuring, project M&A advisory, fundraising strategies and investor engagement. 

4.Green Credit Opportunities and Challenges     

4.1 Opportunities for Real Estate Developers 

• Access to Low-Cost Capital: Developers of compliant projects can access concessional funding pools from domestic banks and global financial institutions, lowering long-term interest burdens due to reduced risk premium valuations.  
• Enhanced Attraction to Foreign Investment Funds: Foreign funds bound by strict shareholder ESG mandates prioritise capital deployment into sustainable developments, unlocking favourable joint-venture capital structuring and M&A opportunities.  
• Optimised Rental Yields: Green-oriented properties remain preferred destinations for multinational corporations and premium tenants, enabling projects to maintain stable cash flows at rental premiums estimated between 10% and 15% above market averages.  

4.2 Challenges and Obstacles 

• Inconsistent Regulatory Frameworks and Criteria: Legal structures remain fragmented as the market awaits the complete execution of the National Green Taxonomy. Misalignment between banks, developers, and regulatory bodies drives up verification and monitoring costs, creating appraisal and asset valuation bottlenecks.  
• Green Funding Gap Due to High Initial Capital Expenditure: Despite substantial demand, green credit disbursement remains relatively low compared to the industry's scale. Certified real estate developers require higher upfront CapEx for green architecture, materials, and technology, demanding strong financial capacity to bridge initial funding gaps.  
• Limited ESG Governance and Reporting Capacity: Maintaining advanced green building operations requires specialised technical procedures and transparent data systems. Deficits in ESG auditing, inventorying, and standardised reporting among many domestic developers significantly hinder access to international and local green capital.  

5. conclusion

Green credit represents an inevitable evolutionary trend for the local real estate market. Proactively implementing advanced operational standards and accessing concessional funding enables developers to enhance project value, streamline costs, and strengthen capital-raising capabilities and exit valuations during M&A transactions. Synchronised coordination between state policy, financial institutions, and real estate enterprises will drive a quality-driven, transparent, and sustainable real estate market.  

To stay updated on real estate market predictions or to explore capital structuring and investment advisory services, please contact Savills Investment Advisory Department.

FREQUENTLY ASKED QUESTIONS

1. How does Green Credit influence the decisions of foreign Real Estate Investment Funds? 

International investment funds face strict ESG mandates from their shareholders. A real estate project securing Green Credit highlights compliance with global sustainability standards, making it significantly easier to attract equity investments or achieve higher valuations during acquisitions.  

2. How can individual investors identify a real estate project eligible for Green Credit mortgage packages? 

Individual investors should verify whether the project holds valid credentials from recognised green building rating systems (such as LEED, EDGE, or LOTUS) and confirm the official list of partner commercial banks providing dedicated green home loan packages for that specific project. 

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