Hanoi Stops Licensing New Projects to Save Property

Accordingly, besides the suspension of and not opening consideration on proposed investment in the construction and housing development business from now until the end of 2014, the city will conduct a review of the planning and implement some conversion from commercial housing projects to housing for low-income people. With the current backlog in the city at about 6,000 apartments, the city will proceed to consider the proposal of the owner on the transformation of commercial housing to social housing, housing relocation and in public service.

 

Until now, three projects have been licensed to convert from commercial houses into social housing; six investors registered social housing at seven locations in the area. On the basis of long-term planning, the city will continue to consider the transition to commercial houses of the investors, facilitating increased market liquidity.

Besides, the city will adjust planning, scale and design of real estate projects, in accordance with the conversion of apartments with large area to the apartments with smaller area, suitable for the needs of people.

 

According to the statistics of real estate transactions Info-Ocean Group, the number of unsold apartments in the city are not only 6,000, but may reach tens of thousands. The large number of unsold apartments had "buried" in the economy a huge amount of capital in the context of the country's economy remaining difficult; and millions of people still do not have housing.

 

Besides the macro solution to rescue the real estate market and help the flow of capital for the market, Hanoi will suspend commercial housing projects, the measure to cut supply is an opportunity to release inventory currently on the real estate market.

 

Based on the actual needs of the people, real estate experts say in 3 to 5 years the market will be able to absorb all of the current inventory. So the suspension of licensing new projects is considered a temporary solution, but necessary in the present circumstances.

 

According to Nguyen Hoang Nam, Director of Info real estate transaction floor, if we stop the development of commercial housing and focus on social housing, we will have to adjust the design and convert commercial housing projects to social housing and low-income housing; this will lead to the risk of breaking urban planning goals. Currently, the market has a number of degraded resettlement housing projects and low-income housing due to low-quality construction, and loose management. If the city does not monitor these well, the risk of having a series of slums in Hanoi is huge.

 

Mr Sam Cucurullo, a real estate expert, said that the suspension of licensing new construction projects is needed, which gives the market more time to absorb all the current supply. Sam also said that the power supply is too large compared to the absorption capacity of the market, which has led to the current situation: "I am surprised to see the works up to 1,500 apartments, but the number of people living there is small. In my opinion, the project should build by each stage gradually."

According to statistics of the real estate company CBRE Vietnam, Hanoi currently has about 20,500 apartments in inventory, focusing on projects that can not find buyers. It will take 1.5 years to 4 years to consume this amount of inventory, depending on market resilience. Due to competitive pressures, the investor is forced to reduce the price. In the present circumstances, to make a sale, the price must be reduced 30 to 50 percent compared to the initial rate to sell housing. 2013 will be a challenging year for many investors.

 

According to CBRE, "At the beginning of 2012, the individual cut large losses in the secondary market up to 30 percent of the purchase price, at the end of 2012, investors drastically reduced primary prices, in some cases up to 40 percent. Investors will continue to offer discounts due to competitive pressure, but reductions of up to 30-50 percent of the initial offered price is expected to take effect.”