VNRE - Continued price increases and the lack of transparency are considered the two biggest problems of the Hanoi’s real estate market. However, experts still believe that the prices will not decrease in medium term.
The information that 252 real estate projects have been put on the table of the Hanoi’s authorities and awaiting the approval may surprise many. People may fear an oversupply, which would lead to the sharp price falls. Some analysts indeed believe that 2011-2013 will be a difficult period for the Hanoi market, when the oversupply will force the prices down.
However, experts and participants at the workshop discussing the prospect of the real estate market in 2011 held by the Hanoi Real Estate Club, all said that the Hanoi market will not be gloomy in the coming years, and , investors will still be able to make profit for another 10-20 years.
The market will still be bustling
The policies encouraging Vietnam’s real estate market development have been more reasonable and more truly reflect the market performance, which has been cited by Nguyen Van Minh, Secretary General of the Vietnam Real Estate Association to prove his opinion that the 15-year old Hanoi real estate market will continue to develop strongly.
The most convincing evidence is the Government’s conclusion about the market development plan under which by 2012, the Government will submit to the National Assembly the draft bill to replace the currently valid Land Law. Meanwhile, the newly released decrees stipulate that the land use right fee imposed on real estate developers must be calculated by the prices close to the market prices. Once real estate developers have to pay more for land, they will not be able to sell at low prices.
Also according to Minh, when the strategy on the real estate market development is approved, when the development process and the opportunities in different market segments become clearer, the market would be even more bustling.
Meanwhile, the urbanization pace remains low, at 28 percent, but Vietnam is expected to enter a new stage with higher development pace of 30-70 percent.
Regarding the market demand, the housing and population count carried out in 2009 showed that the percentage of temporary and not permanent accommodations is very high, at 86.3 percent. As such, with the high GNP income growth rate, the demand for houses to improve the living conditions is still very big.
“The housing market segment will still be bustling in five or 10 years,” Minh concluded.
Hanoi – a market with specific characteristics
Besides the factors related to the supply and demand, Hanoi, as the country’s political and economic centre, has also other specific features, including the sensibilities to the Government’s policies. The real estate values in Hanoi include very high values of the land use right.
Real estate developers complain that there are many legal documents stipulating the real estate market management. However, the problem is that the legal documents guide the implementation of different laws. Therefore, it always takes real estate developers a lot of time to follow procedures for investment projects.
“In order to get the license for a project in Hanoi, real estate developers sometimes had to spend 9-10 years,” said Nguyen Trung Vu, General Director of The Ky Real Estate Corporation. It is clear that the tardiness in the implementation of projects also makes the prices higher, because the complicated procedures means developers waste time on waiting.
Reported by Dung Thanh | Vietnamnet