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Housing conversion project raises doubts

Update: April, 08/2013 - 09:38
Apartment building on Ha Noi's Tran Duy Hung Street. The Ministry of Construction has propossed to divide big apartments into smaller ones to transform commercial housing projects into social housing. _ VNA/VNS Photo Hoang Lam

HA NOI (VNS)— As big apartments are divided into smaller ones to transform commercial housing projects into social housing, a move that aims to warm up the troubled domestic real estate market, experts question whether the conversion makes sense.

The market has over 20,000 houses unsold, according to the Construction Ministry, including about 4,000 low-rise buildings and 16,000 apartments with a total value of VND40.75 trillion (US$2 billion).

Most of the unsold houses are luxury housing; at the same time, demand at the other end of the spectrum is soaring.

The conversion of commercial to social housing would help investors sell their products, reduce inventory and quench the thirst for capital, which could then be reinvested elsewhere.

Last month, the Construction Ministry issued guidelines to adjust the structure and areas of the apartments in commercial housing projects so that they could qualify for the title of social housing.

About 20 investors expressed interest in doing so, according to the ministry, perhaps drawn by the incentives that investors in social housing can enjoy, which include lower taxes and land-use fees and preferential loans.

However, in Ha Noi, social housing has not sold as expected. For example, 946 apartments in Gia Lam District's Dang Xa 1 New Urban Area have been offered for sale 11 times – but have still not all been sold. In Dai Mo Urban Area in Tu Liem District, two buildings face a similar situation.

Moreover, the apartment division project could cause long-term problems for urban development. Subdividing apartments in this way would change the structure of the whole building in ways that could be unsafe, cautioned Tran Ngoc Phuong, Director General of Phuong Huy Construction Group.

He also warned that infrastructure such as roads and schools might not be able to deal with the higher population density – putting pressure on neighbouring areas.

Developers were not encouraged to divide finished apartments or to shift the label of completed products from commercial to social housing, said Construction Minister Trinh Dinh Dung.

Most of the shifted projects were new projects that were still only on paper or in the process of having land cleared for construction, according to the minister, so the changes in design and area of apartments would not affect the structure and safety of the building.

Ha Noi Architecture University former principal Tran Trong Hanh said that the goal should be to develop residential areas where people not only had houses to live but also had facilities to ensure a more comfortable life.

"We cannot just think about helping real estate firms and gamble with the living standards of other people," he said. — VNS


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