Property market in Vietnam has implicit risks

Though real estate market is growing quite well, it has implicit risks, said participants at a forum held in Hanoi yesterday.

Property market in Vietnam has implicit risks

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that in the first half of this year, newly established property firms increased; subsequently, more projects are waiting for approval.
Moreover, local and foreign investors poured investment into the sector; for instance, investors from South Korea and Japan expressed their concern to real estate market in VN. They expected opener investment mechanism for property sector; in Ho Chi Minh City, foreign investors are successful in cooperating with local property developers.
As per international organizations, nearly half of billion dollar poured in real estate in Vietnam in the first four months, accounting for 12.8 percent of the country’s foreign direct investment in the time. This is a good signal for the sector particularly and the economic sector generally.
However, economists fretted over recent “ land fever” issues in three special economic and administrative zones including Van Don in the northern province of Quang Ninh, Phu Quoc in the Mekong delta province of Kien Giang and Van Phong in the central province of Khanh Hoa which spread to many provinces nationwide despite government’s efforts to reduce it.
Vice President of the Central Institute for Economic Management Tran Kim Chung said that eight signs of property bubble including increase in deals, price, value of a project, more new buildings and more investment in the sector.
Mr. Chung added the real estate market circle has four phases including recovery, growth, recession and crisis. From 2011 to 2013, it was in the bottom of crisis and then it recovered in 2014 and developed in 2015 - 2016 – 2017. In 2018 it will grow and 2019 it will fall into crisis.
At the forum, experts expressed their expectation to have changes in policies in the next time. A representative from the housing Management Department under the Ministry of Construction petitioned amendments in housing law and real estate business law which the government submitting to the National Assembly to facilitate investors.
Enterprises also petitioned relevant agencies to put forward appropriate mechanism for local and foreign investors to access to land fund to curb bother some realty bidding procedure.
Additionally, the government needs to measures to boost capital market for real estate to form capital source and balance financial market structure in order to raise fund for social housing program. These matters have been raised for years yet Vietnam has not done it.
Mr. Loc said in the fifth session of the 14th National Assembly (NA) commencing in May 21 will issue more laws relating to real estate market which are expected to promote the sector’s development in a few next years.

By BICH QUYEN – Translated by UYEN PHUONG

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At the forum (Photo: SGGP)

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