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The quietness of the real estate market is a reason for the slowdown in economic development. There are four problems in the real estate market, according to Tong Van Nga, Secretary General of the Vietnam Real Estate Association.

Do you think that the fall of the real estate market is the reason behind the economic development slowdown?

Yes, I do. If real estate investment and business develops well and steadily, this will lead to the development of the construction industry, construction material production (steel, cement, materials for interior decoration) and other industries, including woodworking, electricity, and electronics production. And of course, when the real estate market is quiet, relevant industries suffer.

What are the biggest problems of the real estate market now?

There are four problems. First, the number of real estate transactions carried out on licensed trading floors remains modest, while underground transactions remain popular.

Second, the structure of commodities in the real estate market proves to be unreasonable. The market lacks the apartments that fit the pockets of employees. Meanwhile, investors have injected too much money in building high-grade and luxury villas to serve high-income earners and speculators. Therefore, the real estate market suffered heavily when the bank interest rate increased considerably.

Third, there exist problems in the regulations on compensation for local residents for site clearance. The procedures for granting investment licenses and the procedures for granting red books and pink books, the certificates on house and land use right prove to be very complicated.

Fourth, banks are not really the ‘fellow-traveler’ of real estate developers and real estate buyers. There has not been any long-term fund for the real estate sector in particular, and industries in general.

Currently, real estate developers have been relying on short-term loans from banks, which banks mobilize from the public. That is why the real estate market suffers immediately when the interest rates fluctuate.

Some experts have said that the difficulties of domestic real estate developers are caused by a lack of capital, and this provides opportunity for foreign investors. What is your comment about that?

It is true that while Vietnamese enterprises are facing difficulties due to the lack of capital, foreign investors have jumped into Vietnam, especially the central areas in Hanoi and HCM City.

Foreign investment funds have been taking full advantages of this, offering cooperation with domestic investors or asking to buy back projects at low prices.

Commercial banks have resumed real estate credit, while having slashed lending interest rates. How will this affect the real estate market?

This is really a good sign, but it is not enough to recover the real estate market.

Source: TBKTVN

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