Should Vietnam Need Real Estate Trading Floors?

Construction Minister Trinh Dinh Dung states that the benefit of the development of real estate trading floors recently is that it has brought a new face to the market and has changed trading practices of people. When implementing transactions through trading floors, prices are made public and buyers are provided enough information to avoid risks for parties involved.

 

Although the transparency of products will be improved when products are traded through floors, the obligation of purchasing or leasing transactions through the floor has created more intermediaries, procedures and costs which contribute to the increase of product price. Therefore, purposes of breaking this mandatory regulation are to make prices on estate products equal to its real value, and to ensure the autonomy of the real estate business.

 

Besides these positive aspects, there are some negative ones. Currently, in the world, no countries force transactions to be made through trading floors but brokerage agencies still have opportunities to develop and the role of lawyers is very important because they ensure the interests of both sellers and buyers.

 

According to statistics of the Ministry of Construction, there are over 1,000 real estate trading floors nationwide, mainly run by corporations and major investors, while others are established by individuals or groups with much experience. Besides, series of real estate agencies have come into operation spontaneously and outside the management of the Vietnamese government. This is one of the components which distorts the market, making the status of virtual prices inflated. Frauds and capital tie-up, therefore, become more common.

 

Real estate transactions through trading floor have been made over the years, but currently they are not strictly governed by the authorities. This results in the evasion of taxation of enterprises.

 

“In theory, real estate trading floor is a good idea; however, loose management and supervision caused the unhealthy market development. In the long term, the market still needs the presence of trading floors, but at the moment it is not necessary. The policy of the Ministry of Construction in which does not require businesses to perform transactions through the trading floor is reasonable”, said Mr Nguyen The Diep, Vice President of Hanoi Real Estate Association.

 

Lawyer Truong Thanh Duc of the International Arbitration Centre also said that, in fact, real estate transactions are places where sellers and buyers exchange information. Trading floor only provides information and consultancies to make sure that buying and selling activities are conducted successfully and the trading floor would gain commission.

 

However, Lawyer Truong Thanh Duc said that, in fact, many trading floors do not follow their functions and tasks, especially in the period of hot market, customers are not provided the most accurate information and many transactions do not strictly follow standard rules. Generally, the market should decide what should exist and what should not.

 

As Vietnam has been gradually improving mechanisms and policies, buyers would be the ones who decide transactions. The existence of transactions totally makes sense if transactions demonstrate transparency, clarity and ability to support people in understanding any estate products. Real estate businesses and investors themselves also need to boost their prestige to win trust from customers.