5 “Congestion” Obstruct The Development Of Real Estate Market In Ho Chi Minh City

Site clearance, policies, project transfer … are the “bottlenecks” that hinder the development of real estate market in Ho Chi Minh City in the first 6 months of 2017.

According to a recent report of HCM City Real Estate Association (HoREA), looking at the whole real estate market, there are still potential risk factors such as the situation of supply-demand phase shift, mainly deviation In the high-end real estate segment, resort tourism; The credit capital of banks and social capital (mainly of homebuyers) pour into the huge real estate market, which tends to deviate to some large enterprises and into the high real estate segment grant, tourist resort.

At the same time there has been an increase in many secondary business investors; While segments of the social housing market, affordable housing with high liquidity, “supply” not enough “demand”

According to HoREA, the real estate market has not developed transparent, healthy and sustainable due to the following five “bottlenecks”:

Firstly, “congestion” of land use fees is a burden, is unknown, create a “ask-give” mechanism, which ultimately the buyer must suffer;

Secondly, the “blockage” of land clearance leads to many unfinished compensations, can not be implemented, buried capital of enterprises for long time, no way out;

Third, “congestion” real estate project transfer due to law requires investors to clear the ground and must have a certificate of land use rights, including many mortgage projects as security property. Sure, in many cases it is the collateral for bank bad debts.

Real estate market in Ho Chi Minh City is entangled 5 “congestion”

As a result, new investors have not been created to replace the currently suspended projects, nor have they created a smooth transition in the project transfer market. Normal business operations of enterprises.

Fourth, the “congestion” credit policy is not suitable, not create medium- and long-term capital for the real estate market, while the nature of operation of this market is medium-term, long-term (currently, TCREIT Investment Fund of Techcombank established in July 2016 is only one real estate investment fund in the country ).

Interest rates on real estate loans remain high (around 10% per annum); Up to now, there is no preferential credit provided to four large banks (Vietcombank, Vietinbank, Agribank, BIDV) to implement the social housing policy, with the exception of VND1,500 billion out of a total of VND2,000 billion. The new billion has just been allocated by the State to the Social Policy Bank for loans for social housing (Actually, the Social Policy Bank has not yet had outstanding loans for social housing).

The fifth, the “bottlenecks” of many administrative procedures, prolonged, hidden negative, harassment during the approval process, implementation of investment projects using land, for example: The department, technical design of grade 1 works (from over 20 floors) must be approved by the Construction Management Department (the Ministry of Construction) and then submitted them to the Department of Construction to apply for a construction permit.

Complex administrative procedures caused inhibit the development of real estate in Ho Chi Minh City

The construction permit process must involve design appraisal, but it  is split into two very cumbersome procedures; Moreover, it is necessary and reasonable that, if decentralization to the Department of Construction is also competent to appraise basic designs and technical designs of grade 1 works, the time for carrying out administrative procedures will be shortened. Early implementation and contribution to reduce the cost of housing.

Recently, the Government has issued Decree No. 42/2017 / ND-CP dated April 5, 1977, which stipulates that the provincial level will be appraised the design of high-rise buildings up to 24 storeys, up to 75m in height (this modification is too little). So all works on 24 floors (75m) must also be through the Department of Management of construction activities under the Ministry of Construction appraisal.

While the capacity of the staff of centrally-run cities to undertake the appraisal of high-rise buildings to 100m, some provinces will need the assistance of the Ministry of Construction to evaluate the lower buildings.

See more: https://realestatevietnam.com.vn/