Hanoi to Have 160,000 New Apartments in Three Years

In the first six months of 2010, the market for land plots in new housing zones across Hanoi is very active and prices escalated, especially in the west of Hanoi. In May 2010, housing land prices in Ha Dong district soared 40-60 % from December 2009. Land prices in the northern and eastern areas also advanced 30 %. There was little change in high-priced apartment prices. However, the volume of transactions in the first and second quarters of 2010 remained on average.

 

Explaining this volatility, Mr Nguyen Xuan Thien, Deputy Director of the Housing and Real Estate Market Department under the Ministry of Construction, said that demand is very high while supply is short. In reality, there are many ongoing projects in Hanoi. However, in the past two years, not many large new urban zones or residential areas have been built in the capital city, partly because of incomplete planning, hesitant investors and project delays for site clearance and compensation. These factors have driven up property prices.

 

The second reason for the surge in property prices is that property is considered a safe, high-profit investment compared to other limited and more volatile investment channels. Besides, speculative and rumour-based investment, which has caused many property market fevers, is also behind the property price jump.

 

Dr Nguyen Van Minh, General Secretary of the Vietnam Real Estate Association, said that from 1993 to 1999, Hanoi had around 136 housing projects, but all were behind schedule. When the capital city expanded its administrative area (merging with Ha Tay province and small parts of Hoa Binh and Vinh Phuc provinces), the review of more than 700 projects and plans went behind schedule. Until now, only the first phase of the review has been announced. Reportedly, some projects remain inactive even 3-4 years after investors obtained the licences.

 

Mr Nguyen Khac Tho, Deputy Director of the Hanoi Department of Construction, said that to stabilise the real estate market in the coming time, the Department of Construction will submit solutions to the Hanoi People’s Committee. It will ask the municipality to request the Government and the Ministry of Construction to complete capital planning, and inform the entire society of the development roadmap and detailed construction investment plans. The city will make clear all stages of real estate from investing and project planning to dealing, transferring or leasing. Land leasing and project bidding must be done transparently.

 

According to experts, projects must be made transparent and public to provide true and official information for buyers. Mr Nguyen Do Viet, Deputy General Director of Song Da Thang Long Company, said that to do this work well, competent authorities must monitor and control it, because we have already had regulations on project announcement.

 

Deputy Construction Minister Nguyen Tran Nam affirmed that the Prime Minister will approve the capital plan next month, which covers the “rescue” of 800 projects halted because of Hanoi’s expansion and more than 200 high-rise building projects. According to statistics, the city will have an additional 160,000 apartments, give or take a few, in the next three years. This strong supply for Hanoi will help cool the overheating market. In the long term, according to Deputy Minister Nguyen Tran Nam, supply needs to increase while companies need to fully understand this complex commodity, helping make the real estate market transparent.

 

Mr Ngo Trung Hai, Head of the Vietnam Institute of Architecture, Urban and Rural Planning, added that in the future, Hanoi will consist of a central municipality, five satellite cities, and three ecological urban zones. Compared with the structure made in 1998 with a central municipality and satellite cities, Hanoi will have two satellite cities of Soc Son and Phu Xuyen - Phu Minh. With this structure, the urban space will be more balanced and there will be no hot development points as in the west recently.