Currently, the high real estate inventory makes it hard for Vietnam to control and reactivate the market. To address this situation, the Ministry of Construction of Vietnam has proposed a breather for licensed housing development projects with construction sites uncleared or less than 30 percent cleared across the country.
The oversupply is an obstacle to the revitalisation of Vietnamese real estate market. Most real estate firms share the same viewpoint: It is very hard to thaw the market and improve liquidity at the moment. However, the number of real estate projects forced to an actual halt remains modest.
According to the Ministry of Construction, among more than 3,700 licensed projects (granted over 90,000 ha), 2,900 projects are underway, 413 projects need to have plans changed, and 411 projects need to be paused. Thus, the ministry said the 411 projects which need to be halted are far less than reality. This represents lax determination of local authorities in reviewing and classifying projects as directed by the Government regarding the enhancement of real estate market management.
Therefore, the Ministry of Construction has demanded a breather for housing projects without any construction site clearance or with construction sites less than 30 percent cleared across the country.
For projects with construction sites less than 70 percent cleared, localities should take the initiative in seeking solutions. Projects with the construction site cleared more than 70 percent, now underway or facing illiquidity will be allowed to subdivide individual apartment areas to less than 70 square metres which are sold at expected VND15 million per square metre. Commercial housing projects are also allowed to convert their use purposes into service buildings, office buildings and trade centres if necessary, and even into affordable social housing for low-income people and industrial workers.
For projects not fitting local development demand and planning, they will be considered for other purposes even when the site clearance is completed. The Ministry of Construction asked localities to shorten the time for reviewing, assessing and transforming the structure and functions of apartments and arrange budgets to purchase commercial housing projects to turn into resettlement and social housing projects.
Mr Pham Si Liem, Vice Chairman of the Vietnam Federation of Civil Engineering Association, said, given current difficulties, real estate companies must be told to ease their projects after the review. If projects are being paused, the reason for this must be made clear. “In my opinion, the most important thing is the use of land of halted projects. If the land is taken back by the State, what will be done on it amidst a slowing real estate market? Is there any substitute investors?” he added.
The revocation of licensed projects also needs to be considered carefully. He added that this is worthwhile if other investors can join in and take the place. Revoke projects without any viable alternative will only result in having to spend money protecting the site. However, in the present context of market slowdown, finding a substitute is not easy.
According to some experts, suburban projects can be used for farming because the land was previously cultivated by local farmers before it was taken by the projects. Currently, Vietnam wants to develop the farming economy, but it lacks land fund for this.
Luong Tuan
Vietnamese
