Government introduces real estate exchanges

Experts divided on whether new real estate exchanges will reduce or inflate property prices.

Real estate developers and agents will have to sell, buy and lease properties through exchanges from this month, as part of a new government plan to improve the transparency of the sector.

Businesses caught conducting transactions outside the exchanges will be fined, according to a May 21 Construction Ministry circular, which comes into effect late this month.

Properties traded through an exchange must have all the necessary legal paperwork, such as ownership documents, construction permits and tax invoices.
Information about the properties must be advertised in the media for at least three days before any transaction can be concluded.

Real estate agents said the new regulation would eliminate illegal sales and stop businesses from hiding information about their properties.

Individual sellers and landlords do not have to use the exchanges.

However, if they do, they will not be required to advertise their properties.

Many real estate businesses have recently set up exchanges in preparation for the new regulation, which was foreshadowed at the beginning of this year.

The exchanges offer various services, ranging from brokering, appraising prices, consulting and auctioning.

Each must have at least two certified real estate brokers.

In the past, such exchanges have existed in the form of “real estate supermarkets,” which offered more services than smaller unregistered brokerages.

Truong Thai Son, deputy chief executive officer of Hoang Quang Company, said the exchanges would help improve the market transparency.

The new trading framework will benefit both sellers and buyers, said Son, whose company has opened two exchanges in Ho Chi Minh City and the Mekong Delta hub of Can Tho.

ACB Real Estate Company Chief Executive Pham Van Hai said developers would have to ensure their properties met all legal requirements before offering them for sale on the exchanges.

The new system is designed to prevent the sale of properties in projects that have not obtained appropriate approvals and permits.

This practice was rampant last year when the market was red-hot, Hai said.

Tran Anh Dung, director of a Hanoi-based real estate company, said he expected the new regulation to dampen prices, which skyrocketed last year as speculators tried to profit from uninformed buyers.

“When information about properties is made public, their selling prices may be brought down to their true value,” he said.

Under the new regulation, information about the properties for sale or rent must be posted at the exchanges for at least seven days, publicized in a newspaper at least three times and aired at least once on a television channel.

The property owners must pay the cost of publicizing the information.

Vendors can only sell a property after the advertising period is complete.

Auctions must be organized if there are more buyers than the number of properties.
However, some other businesses are concerned that compulsory advertising would add to the cost of properties.

Moreover, they said, as each province or city only has one television station, developers and agents will have to queue up to publicize their properties.