City seeks way out of housing quagmire
by Le Hung Vong
HCM City authorities are looking for ways to revive the city's property market, as nearly 900 of 1,108 property projects have been left unfinished because of financial problems.
According to figures released by the city's Construction Department at a meeting last week, the property projects, which are located on a total of 4,097ha, comprise a total of 165,079 apartments in 23 districts.
Of these, 212 have been completed, 603 are under construction, 122 have not started and 14 have been suspended. Investment-license applications are being prepared for 157 projects.
City authorities said that only five per cent of the work had been done at the Waseco Plaza in Tan Binh District's Ward 2, although it was scheduled for completion next year.
In addition, construction has been suspended on an apartment-office building located on 3.1ha on National Highway No 50 at the Nguyen Van Linh Crossroads in Binh Chanh District's Binh Hung Commune.
After completing work on its foundation in February, the developer could not get a loan because interest rates were as high as 20 per cent at the time.
With an interest rate of over 18 per cent per annum, production costs of one apartment would rise from the expected VND10 million per sq.m to VND12 million per sq.m, said Tran Lenh Phu, general director of Company No 194, developer of the apartment/office building complex.
Speaking at a meeting last week to discuss solutions to the crisis, Nguyen Thanh Tai, former deputy chairman of HCM City, said the stagnant property market was caused by inappropriate business strategies on the part of developers and an imbalance between supply and demand.
In addition, many regulations affecting planning, policy and management are not a good fit for urban conditions.
Tai said that to develop all of these property projects, a huge capital source was needed. However, many enterprises are financially incapable and have to depend on bank loans and contributions from home buyers. As a result, they face difficulties when the market liquidity runs low.
Despite several cuts, apartment prices remain too high for low-income residents, and there are few low-cost houses on the market for low – and medium-income buyers. This is why many apartments remain unsold, although residents badly need accommodations.
According to a study conducted by Dragon Capital, Ha Noi and HCM City each have 35,000 unsold apartments. It would take seven years for the two cities to sell these apartments, the report said.
Based on an average price of VND2 billion for each apartment, the lost capital for all of these apartments amounts to VND140,000 billion.
Moreover, there are fewer home buyers in today's market, resulting in a loss of capital.
Le Hoang Chau, chairman of the HCM City Property Developers' Association, said construction delays meant developers were unable to hand over apartments and houses to buyers in due time, leading to complaints and disputes.
In such a critical situation, many developers have proposed that their apartments be divided into smaller accommodations to make them affordable to low-income buyers.
Apartment projects currently are being built following the 1:2:1 ratio, meaning 25 per cent of condo units are small-sized, 50 per cent are medium-sized and 25 per cent are large-sized. Many developers said this ratio regulation was not suitable for current market conditions.
Developers are asking for permission to increase the number of apartments in their projects. For example, the developer of an apartment project on Bai Say Street in HCM City's District 6 wants to increase its number of apartments from 144 to 192.
An investor of an apartment building on Nguyen Huu Tho Street in Nha Be District's Phuoc Kieng Commune in HCM City has proposed that his apartment sizes be reduced to 60-90sq.m each.
And the developer of an apartment/office building in Binh Chanh District's Binh Hung Commune has asked authorities to shift 3,700sq.m slated for office space to low – and medium-priced apartments to make them affordable to medium-income buyers.
However, Nguyen Thanh Toan, deputy director of the city's Department of Planning and Architecture, said Government agencies should not intervene in apartment sizes and and that companies should make the final decisions.
Investors in property projects also said they wanted loans at reasonable interest rates of 10 to 15 per cent per year, with other preferential conditions that businesses in other economic sectors are enjoying.
With steel exports reaching US$1.5 billion in the first nine months of the year, the Viet Nam Steel Association (VSA) hopes that this year's exports amount to $2 billion.
According to Dinh Huy Tam, VSA general secretary, this year's steel export turnover will be equal to that of last year. He said steel producers had found new markets, including Cambodia, Laos and Myanmar.
The steel inventory has dropped to 320,000 tonnes, down 14 per cent from the same period last year.
Tam also predicted that local steel demand would rise strongly near the year-end as the construction season had started and many projects were now awaiting the final touches for completion.
He said that steel consumption in September amounted to nearly 400,000 tonnes, compared with 350,000 tonnes in August.
Figures from the Ministry of Industry and Trade revealed that steel and other building-materials industries were facing difficulties and have had slow growth due to a decline in local demand. This year's inventory of construction materials is 40 per cent higher than the same period last year.
Viet Nam: top beer guzzler
Viet Nam has the highest consumption of beer in Southeast Asia, with a total of 2.6 billion litres of beer drunk in 2011.
At least 1.8 billion litres of beer were consumed by Thai drinkers and 1.63 billion litres by Filipinos last year, according to the global market research company Euromonitor International.
The three top beer-drinking nations were followed by Indonesia, 236.4 million litres; Malaysia, 171.4 million litres; Cambodia, 136.3 million litres; Laos, 134.3 million litres; and Singapore, 108.2 million litres.
Myanmar, who became an ASEAN member in 1997, had the lowest consumption rate with 30.4 million litres of beer last year.
The consumption of the six lowest beer-drinking nations of Myanmar, Singapore, Laos, Cambodia, Malaysia and Indonesia was just half of the volume of beer drunk by Filipinos over the period.
In 2010, the Euromonitor International predicted that beer consumption in the Vietnamese market would grow rapidly. Vietnamese people consumed 1.6 billion litres of beer in 2009, an increase of 56 per cent compared with 2004.
Earlier this year, Kirin Holdings Company Co, Japan's second largest brewer (just behind Asahi Breweries) reported that Viet Nam was among the top 25 beer-drinking nations in the world, with an increase of 15 per cent over last year, just behind Nigeria (17.2 per cent), India (17 per cent) and Brazil (16 per cent).
Few local drinkers, though, have taken pride in the new beer-drinking position of Viet Nam.
Nguyen Tuan Tai, a resident of Ward 25 in HCM City's Binh Thanh District, who shares beers with his friends every evening, said: "Such high level of beer consumption indicates a big waste of time, money and even health."
"As citizens of a poor country, we should take no pride in the No 1 position," said a third-year student at HCM City Economics University, who declined to be named. "For me, it's [kind of] a social evil and a shameful position."
The student said that beer drinkers should use part of the huge amount of money spent on beer to improve the living standards of the poor. — VNS