How Are Real Estate Policies Working?

Many new real estate projects will be carried out in the near term thanks to the government’s recently approved real estate supporting policies even though Vietnam’s economy has not yet fully recovered from the economic decline. However, state agencies, investors and ordinary people still have to take some drastic measures in order to implement these policies effectively and ensure stable development of the real estate market. 

 

A wide range of new projects
Mr Vu Van Phan, Head of the Standing Committee under the Central Steering Committee for Real Estate Market and Housing Policies said the government of Vietnam has recently issued some legal documents on policies to boost investment in housing development for targeted people via encouraging all economic sectors to invest in building student accommodations. Mr Phan released the information at a seminar entitled “Vietnam Real Estate Market-Concerning Issues”, which was jointly held by the Vietnam Business Forum newspaper, the Department of Real Estate Market and Housing Management, the Vietnam Real Estate Association under the Vietnamese Ministry of Construction under the sponsoring by the Vietnam Chamber of Commerce and Industry and the Ministry of Construction.

 

Fifty-five cities and provinces across Vietnam, and the Ministries of National Defence and Police have registered 267 projects to build accommodations for students in the 2009-2015 period, which will occupy a combined 4.931 million square metre and provide accommodations for 812,000 students.

 

The Ministry of Construction said 19 localities nationwide have registered 110 projects to build houses for workers with a combined acreage of six million square metres to serve over 960,000 people.

 

Regarding houses for low incomers, the Ministry reported 21 localities have registered 189 projects with a combined area of 7.1 million square metres to supply 166,390 apartments for 700,000 people.

 

Under the Decision No. 167/2008/QD-TTg by the government dated on December 12, 2008, Vietnam expects to provide housing support for 500,000 poor households in rural areas through 2012 while the Ministry of Construction has recently reported 126,048 poor households have registered for the programmes as of June 24, 2009.

“Localities are speeding up implementations of these programmes in order to deal with housing problems by the targeted people,” Mr Phan said.

 

Vietnam piloted allowing foreigners to buy and own houses for particular periods in Vietnam from January 1, 2009, which is expected to drive up the Vietnamese real estate market. Experts estimate around 10,000 out of total 80,000 foreigners in Vietnam want to buy or own houses in the country.

 

Further reform
All people can see strong effects of policies to the real estate market. Mr Phan added that the government of Vietnam has recently issued the Resolution No. 33/2008/NQ-CP to allow piloting some administrative procedures during implementation of new investment projects in a bid to facilitate participating parties and prevent risks as well as foster transparency of real estate transactions. The regulation allows investors to propose local governments approve making of detail programming at a ratio of 1/500 for their land lots instead of making the detailed programming at a ratio of 1/2,000.

 

In order to simplify and deal with inadequacies of procedures involving land allocation, leasing and land use fee collection, the government also allows local governments to grant certificates of land use rights for owners of houses and underway buildings. Project’s investors are allowed to pay land use fees in line with the implementation pace of projects. The government only requires fulfilment of investment procedures regardless of granting investment certificate.

 

The resolution has surmounted adequacies of earlier regulations in order to shorten preparation time and reduce costs for investors.

 

Mr Phan attributed that the amended law on infrastructure that were passed by the National Assembly in June, 2009 mentioned some important investment procedures. Investors now only have to use norms, technical indicators and relevant information for issued by state construction agencies as references and do not have to strictly follow them as mentioned earlier in Article 43 of the Law on Construction. The government also allows projects’ initiators to themselves appraise base design and contents of projects and only ask for state agencies’ assessment upon special situation, which will replace the regulation mentioned in Article 59 of the Law on Construction. Projects that are allowed to select contractors should be worth maximal VND5 billion (US$240,646), regardless of regulation mentioned in Article 20 of the Law on Auction. Investors of projects to build student accommodations are also allowed to select contractors for bid packages involving consultancy, construction and equipment and facility installation.

 

The amended law synchronizes a common sample of certificate for land and house use rights, as well as process of competing administrative procedures in order to facilitate users and avoid procedures overlap, he added.

 

All the aforementioned policies have created a new gust of wind to boost development of the real estate market in the near term.

 

“Vietnam to issue regulation on land and real estate market management,” Mr Nguyen Tran Nam, Deputy Minister of Construction
In my opinion, the real estate market of Vietnam boasts a great development potential though it has just been set up and has small market capitalization. However, the country still lacks regulations on the real estate market and the existing regulations are inadequate and causing some trouble to enterprises and ordinary people. We are compiling a new regulation on land and the real estate market to submit to the politburo for approval soon so as to create more legal framework for enterprises.

We must say that it is really essential to intensify training for real estate companies which still lacks knowledge about the sector. The most pressing issue in the real estate of Vietnam is reliant and impulsive psychology in investment while the government has not yet provided sufficient information to help people understand the actual trend of the market.

 

“Facilitating foreigners to buy houses in Vietnam,” Mr Holger Molendyk, Investment and Business Development Manager of Viet Hung Urban Development and Investment Joint Stock Company
In my opinion, regulations that allow foreigners to buy houses in Vietnam should ensure comfortableness to ignite demand by this group of clients. In addition, Vietnam should make market database transparently and clearly, simplify administrative procedures, and strictly follow market rules in order to ensure investors’ interests.

Vietnam should also make a legal framework to tie investors’ responsibility to clients and apply synchronous prices for apartments.

 

“Policies should be based on reality,” Mr Le Khac Hiep, Chairman of Vincom Group’s Board of Directors
Enterprises are facing a wide range of obstacles in site clearance; thus, participation by state authorities will make the work easier and better compensation policies will drive up site clearance pace and facilitate real estate trading companies.

At present, policies often do not keep up with reality. It is laudable to make policies come up with or even go ahead the reality in order to facilitate operations by real estate trading companies.

 

“Criteria need building for real estate transactions,” Mr Tong Van Nga, Vice Chairman of Vietnam Real Estate Association
Many enterprises place attention to real estate transactions on floors but Vietnam still lacks a clear mechanism on this issue, apart from existing regulations. From January 1, 2009, all real estate trading floors must meet all professional criteria in pursuant to the Real Estate Business Law and the Decree No. 153/2007/ND-CP. Thus, it is very important to improve the quality of professional human resources, which is a big challenge to enterprises amid fierce competition in the domestic and international markets.