Real estate enterprises face difficulties in starting up new projects

The number of property projects this year is much smaller than in 2016 due to numerous difficulties in starting up new projects, especially time-consuming administrative procedures and high land use charges, said Ngo Quang Phuc, vice chairman of the HCMC Real Estate Association (HoREA).

At a seminar “Solutions to promote the growth of the real estate market in the rest of 2017” in HCMC on August 16, Phuc, who is also deputy general director of Him Lam Land, said the real estate market has slowed down this year compared to two previous years.

The tightening of real estate credit has caused difficulties for investors. Besides, complicated administrative procedures are attributed to the slower growth of the sector.

This year, Him Lam Land will launch only one instead of three new projects as planned due to obstacles to procedures, Phuc added.

Nguyen Minh Khang, general director of LDG Investment Corporation, said it often takes 15 to 18 months to complete administrative procedures for a project excluding the time required for compensation and site clearance.

In addition, land use charge is another obstacle to developing a property project as it is unpredictable. LDG acquired a land lot for VND120 billion (US$5.27 million), but the land use charge paid to the State alone amounted to VND115 billion. It means that real estate enterprises have to pay a large amount of money to the State, thus causing prices of houses to skyrocket, said Khang.

Economic expert Dinh The Hien said the scarcity of land, site clearance difficulties and high land use charge in the city have caused the suspension of many projects.

Data of the HoREA shows that houses offered for sale in the first half of this year decreased compared to the year-ago period. The number of low-cost and high-end houses rose 1.9 and 1.8 times respectively while the number of houses in the mid-end segment went down by 42.1%. Some large investors in this segment had no houses to sell.

A decrease in speculation was also mentioned as a reason of the stagnant market. Enterprises investing in the low-cost segment are expected to gain sustainable development in the future.

Bui Quang Tin, another economic expert, said interest rates may go down in the five remaining months of this year as well as in the upcoming years, making life easier for those realty developers with access to credit.

At the seminar, Vu Van Phan, deputy head of the Housing and Real Estate Market Management Department under the Ministry of Construction, said the Standing Committee of the National Assembly has approved VND840 billion to build houses for policy people and VND1,160-billion loans to build social houses as stipulated in Decree 100.

The Vietnam Bank for Social Policies has also mobilized some VND1 trillion to develop social housing projects. A total of VND2 trillion will be disbursed this year to support enterprises and home buyers.

Source: The Saigon Times

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