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Real estate firms need to rethink market strategies

Update: February, 08/2012 - 09:26

Minister of Construction Trinh Dinh Dung told online news website VnExpress that real estate developers need to be restructured to meet the demands of a wider segment of the population.

What do you think of the real-estate market last year?

Last year there were times when the real-estate market seemed to be hot. But it was deceptive. The market did not develop in accordance with the economy's financial status. A country with an income per capita of US$1,000 a year cannot afford the extremely high property prices, which are only affordable in a country with a much higher income.

The situation showed clearly that we lack experience in management of the real-estate market.

I reckon that we need to fix the problem to the very root, meaning real-estate businesses must restructure. So far, they have only created products that meet the demand of people with very high incomes. Now they must pay attention to small-to-medium scale products to be appropriate for a majority of people.

Investment in real estate must strictly conform to current demand.

In 2012 the Government will instruct localities to set targets for social housing based on legal regulations.

You have said the Ministry of Construction will focus on developing social housing. How far has this progressed so far?

In 2011 the Prime Minister approved strategies to develop housing until 2020 with a vision to 2030. This is the first time we have had a strategy to develop housing since 1975.

Under the strategies, two kinds of houses will be developed.

First are commercial houses, which will be developed based on the market and be regulated by the market, to meet the needs of financially capable people.

Second is social housing, which will need help and support from the Government. This year the strategy to develop housing will focus on eight groups of people who cannot afford to buy a house to live – including poor people in both rural and urban areas, people who have contributed to the State, Government officials, and students.

When will the poor have access to social housing under the strategy?

The strategy to develop housing is a long-term one. I believe that in the near future many people will have access to social housing under this strategy.

Real-estate investors should develop commercial housing along with social housing.

Property prices must fall to create opportunities for most people who have actual need, but this will put businesses in difficult situations. What do you think?

When we talk about the property market, we need to consider customers, sellers, and Government management. It is obvious that the market cannot develop positively unless it meets the requirements of customers. Therefore, property businesses and the market itself must exist only for the customers.

We must balance the relationship between the Government, businesses, and customers, but focusing on the rights and benefits of customers is the most important thing.

What do you think of the prospects for the property market this year?

The real-estate market will continue to experience a very tough time this year due to the global economic turmoil and other difficulties. Therefore, the Government will continue to set targets to control inflation and stabilise the economy. The Government will also constrain the monetary policies and reduce public investment to restructure the economy. Investment must be deep instead of wide.

Thus, the investment in the property market will obviously not increase sharply. In addition, the high interest rates add further difficulties to the market.

What I am most hopeful in 2012 and the coming years is of enhancing social housing.

The Ministry of Construction hopes social housing will receive help from the Government, businesses, and people. — VNS

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