Vietnam Needs US$130B to Build 1.3B Sq.m of Houses by 2010
Vietnam needs a total investment of US$130 billion to build 1.3 billion square meters of housing to meet domestic demand in the next 10 years, according to the Ministry of Construction.
The ministry estimated that the country will require US$8.4 billion for construction of 100 million square meters of houses per annum. Of the sum, the state budget can provide US$10.4 million while commercial banks will finance US$8.1 billion.
Commercial banks play a decisive role in financing real estate projects because almost all property developers, whose registered capitals are still around VND6 billion each, always lack funds.
Capital shortages have forced developers to raise funds from its potential clients before their projects are put into operation. A majority of such funds are normally sourced from local banks, Tran Kim Chung from the Central Institute for Economic Management said.
Outstanding loans of local banks for real estate projects jumped 179.3% from 2007 to US$8.1 billion in 2009, accounting for 10% of their total loans, the maximum amount stipulated by the State Bank of Vietnam.
A research by the U.S.-based RNCOS firm showed that the country lacks 20 million apartments each year but can meet only 20% of total demand for the housing area.
Meanwhile, up to 70% of Vietnamese households are living in unqualified housing conditions and a large number of people own no private house.
Rapid urbanization and rising population are attributed to the shortage of accommodation, RNCOS said, blaming limited financial capacity of households for the situation. (VNS)
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